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Ways to protect your price when negotiating a sale

Whenever we have to negotiate a sale, we confront the fact that sellers and buyers naturally disagree about price, based on the endowment effect. Science has demonstrated a bias among owners to over-estimate the value of any item they possess. This bias does not make the potential buyer correct, but it ought to give the seller pause. Your buyer is very unlikely to accept your initial offer, all other issues being equal. Fortunately, science is also showing us some ways to better protect the seller's price. 

Harvard Business Review: Why Buyers and Sellers Inherently Disagree on What Things Are Worth, 2016-May-13 by  Carey K. Morewedge

One effective tactic is to direct the attention of buyers and sellers to the information that they ignore. Asking buyers to first think about the valuable attributes of the good they might acquire leads them to value the good more. Asking sellers to first think about what else they might do with the money they would receive—the opportunity cost of owning the good—seems to also reduce the price they demand to give up what they own.

Another effective tactic is to change the reference price that people use to evaluate the good. When buying or acquiring a good, one might remind sellers of cheaper alternatives, like used versions of the same good or similar more economical goods. When selling or trading a good, one might remind buyers of more expensive alternatives to what one is offering.

A third tactic is to get buyers to touch, hold, or imagine owning the good. Experiences like interacting with a product through a touchscreen, receiving a coupon for it, or temporarily being the highest bidder for it in an auction all have the potential to induce the endowment effect for the product if they make us feel like we own it.

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