Q&A: Unreasonable discount requests

A Negotiation Expert Answered:

As the seller, you have as many responses to requests for unreasonable discounts as the buyer has reasons for asking for the discount. Before we make recommendations as to how you should respond, lets spend a brief moment in the customers shoes.

So why do you think they have asked for an unreasonable discount?

Are they "trying their luck" and testing your knowledge or resolve to see what they can get away with? Its a well known tactic in negotiation to open with an extreme position. We will address this tactic later in this response.

Do they really know the real market value of your goods or services? Perhaps they have not yet shopped around and are blissfully ignorant of the real value. If this is the case, a good place to start is with a question. Ask why they have asked for such a large discount. If they cant substantiate it, the issue evaporates before your eyes. If they quote one of your competitors prices, then you will need to either substantiate their claim and compare your own offering (We are assuming you know how you compare to your competitors).

Is it this consumers national custom to ask for a large discount? Vendors from certain countries will not treat you with respect unless you haggle or barter with them. It is customary in many eastern and middle eastern countries to treat sales and purchasing as more of a social experience. So for example, you risk offending an Egyptian souk market stall owner if you refuse their offer of mint tea, and instead push to talk about price too soon. Uninitiated British and Americans tourists can become frustrated at having to spend several minutes making small talk and bargaining on price to get the carpet or garment they desire. We recommend you stop yourself for a moment, and take a guess as to whether they are foreign. Do their accent, dress, features and colouring suggest they are foreign? If so, accomodate their custom in a similar way Egyptian stall owners accomodate impatient western tourists customs.

So back to our first question - why would they try such a tactic or ploy on you? "Extreme Offers" are designed to lower expectations through shocking you. Even though they may not get the extreme price they have opened with, they may still end up succeeding at chipping away at your margin and walking away with a lower price than you would have given them without this ploy. They do risk offending or even outraging you, resulting in the sale being lost altogether. So as with many tactics, they are taking a risk.

When faced with tactics, separate the person from their behaviour. If you are surprised, feel free to show your surprise. If you feel like laughing, then laugh (do let them know that you are laughing at their offer and not at them). Natural authentic behaviour can diffuse the situation and facilitate a deal. We dont recommend an extreme counter proposal among two western negotiators. Let the other side know that their expectations need to be adjusted, and quote other deals as precedents to inform and persuade them over to your price."

Our answer follows Steven Coveys 5th Habit of Highly Effective People - "seek first to understand, then to be understood". Its no secret that the best salespeople are better listeners than they are talkers.