Erosion

My family and I visited a famous model village on the Isle of Wight. It was situated on a cliff top - right on the edge - with spectacular views over the Atlantic Ocean. A few days after we visited the place, it shut down because erosion from the constant pounding of the sea had eaten away at its foundations. Some of the exhibits had slipped into the sea - lost for ever. Erosion is often not taken seriously. In negotiation we can make it work well for us.

Our counterpart has fixed terms or amounts or fixed prices. We keep eroding away at the edges, trying to make their firm stance give way. This is a marvellously effective tactic, which I try to use as routinely as I can. It works by using a simple question, 'If I buy this, will you throw in that?' I was buying some suits recently. I let it be known that I was interested in buying one suit. I asked, 'If I buy three, what discount will you give and how many shirts and ties will you throw in?' Whenever you are in buying mode, try to use this tactic. You can have some fun. Recently my two daughters went together to buy a new mobile phone each. They used the power of 'two purchases in one' to ask for more. 'I'm interested in this model. If I buy two, what is your best price and what else can you throw in?' The final erosion used this book. Carleen said, 'My dad has written a book on negotiation and if I don't go back with more than this I'm in trouble!' And on this occasion the girls got a great deal with a lot of fun in the process. Their buying tactic in this case was erosion.

If you are selling, beware because the buyer wants to get some little extras. These are dangerous because they often appear small, but multiplied they have a profound effect. We must price them, identify their real cost and be seen to be doing it. We must never give in to the eroding tactic. We must trade, not give in.

Let's say we are in property or estate agency. We offer to sell a house for 2.5 per cent commission. The owner wants to negotiate to 2 per cent. The value of the house is £200,000. Half a per cent. Doesn't sound very much, does it? In reality it is a great deal. Two per cent is £4,000; 2.5 per cent is £5,000. It means I am losing 20 per cent of my income and probably a much higher percentage of profit. If I make five similar sales each month, I am losing £5,000 per month or £60,000 per year.

Look at it in another light. If five houses per month at 2.5 per cent yields £80,000 profit each year, then that half per cent will reduce my profit from £80,000 to just £20,000. That half per cent has reduced my profit by a staggering 75 per cent.

I am often asked for training manuals. Say a buyer asks me for 100 extra training manuals —gently eroding my determination! I calculate how much that costs, possibly £5 each, and say incredulously, 'You are asking me to give away £500. I do five of these events each month and you are suggesting I give away £2,500 each month, that's £30,000 each year!'

It's calculator time again. Get out the calculator, let them see you do the sums, talk out loud while you do it, and make sure that the outcome is spoken out - and, ideally, written down - in front of the other party. It helps to let the other person see your calculations and your cost implications. Let them see on paper the calculation you have just made.