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An FBI Hostage Negotiator Buys A Car [audio] (npr.org)
373 points by kungfudoi 1755 days ago | hide | past | web | 147 comments | favorite

Fantastic Planet Money episode. However, it is about 17 minutes long which a whole bunch of political stuff which may be viewed as fluff. Approxcript of the negotiation techniques below:

1. "Nibbles": Reach a general agreement (agree on a basic premise). Instead of instantly accepting the deal, push for one small concession at a time.

2. Before entering into a discussion, think about a 'BATNA' = Best Alternative To Negotiated Agreement. Are there other options? Is there a minimum you are willing to agree with?

3. "Expanding the pie": While certain points in contention may be very inflexible (salary, job position), "expand the pie" and seek out other areas which may be more flexible (vacation days, compensation). This also serves to clarify the central hinge of the negotiations.

4. Disarming Empathy. Essentially, the act of being empathetic (in a sort of self-deprecating way perhaps?) so that the other side bargains against themselves while you do not budge from your initial offer.

I was looking for this kind of summary, thanks for posting it, but after reading it I fail to see how "Nibbles" and "Expanding the pie" are not basically the same thing.

"Nibbles" are when you extend an agreement with further small concessions. Works best when the other side is under more pressure than you - they were happy to get to your yes, and the pain of losing your agreement is something they will avoid.

"Expanding the pie" is more like changing the game. You have one thing you're negotiating on, and it's a zero-sum situation. One winner and one loser. But what if you bring other things into the negotiation, to turn that into a win-win situation? Then it's easier to find agreement.

Yes, I get that, but "Nibbles" still seem like after having concluded some sort of initial deal, you "expand the pie" by asking new stuff (instead of negotiating on the salary, you negotiate on salary+holidays+benefits).

It's called expanding the pie when a change in the terms of the negotiation generates an even greater win for all parties involved.

The actual example in the podcast was over pumpkins. There was only one person selling pumpkins in the village the negotiator was in during her time in the Peace Corps. She wanted to buy all four of them but the farmer would only sell her two. She even tried offering double but the farmer wouldn't budge.

The customer took the position of buying all four pumpkins because she needed them in order to make enough pumpkin pies.

The farmer took the position of keeping two pumpkins because she needed the seeds to plant for next year's crop.

Once they got out of positional bargaining and discovered the root of the problem, the solution became clear: The customer gets all 4 pumpkins at the original price, but first the farmer opens them all and takes the seeds, which the customer would have thrown out anyway. Thus, both got more than they would have if they'd stuck to their original positions.

Don't be confused by the fact that the meaning behind their names can be used in different contexts. You described "expanding my pie", while the intended meaning behind the name is "expanding everyone's pie".


The difference is "nibbles" is getting more out of the other party after an initial agreement has been made.

"Expanding the pie" is widening the scope of the negotiations in order to reach an agreement in the first place; within the parameters of the initial offering an agreement was never going to be made.

Expanding the pie is more about:

1. calculating the total combined value all involved parties receive from making a deal 2. trying to increase this value above and beyond their BATNAs 3. then carving up and sharing this excess

So it's about focusing on specialized synergies and value creation. For a more in-depth read I'd recommend Co-Opetition by Brandenburger and Nalebuff (whose class on Negotiations I just completed): http://www.amazon.com/Co-Opetition-Revolution-Combines-Compe...

Nibbles = get the other party to feel like this is a done deal, then push them for further small concessions. (nibbles are one-way) example: "gee, that job offer sounds great!! but there is one thing- just caught that I have to pay for parking. Can you do anything there to make up for that?" Expanding the pie = find a compromise that benefits both parties: "I understand you're extremely short on office space until the new office space is built out, and your office will be a painfully long commute for me until my lease runs out and I can move closer to the office. How about I work from home for a while?"

One is a "what" the other is a "how".

This is hastily-written, sorry

Step 1: Decide what car(s) you want to buy, down to the color, trim, options, etc. Type it all out in concise list form.

Step 2: Visit Edmunds.com, etc and get a general idea of local fees, taxes, and costs.

Step 3: Find the dealer websites within 120 miles or so, and write down their "Internet Sales" and "Fleet Sales Manager" email addresses.

Step 4: Compose an email to each of the email addresses you wrote down. Say that you are sending this out to several dealers within 120 miles and you will be selecting the lowest cost for the following list (which you created in step 1). Ask them to give you their "walk out the door" price. This price will include all fees, taxes, costs, etc.

Step 5: Wait. Maybe 30% of them won't reply, but that's OK.

Step 6: Take the lowest quote and tack it to the wall. Send another email to the next 2 or 3 lowest quotes saying that the guy tacked to the wall is quoting you $true_value (don't lie). See if they come down in price.

Step 7: Pick the one.

This has worked 3 times for buying a new car. No haggling or even stepping into the car lot until negotiations are done. You don't necessarily have to take the lowest quote (it's nice to pay a little more for a dealer closer to home) but it sure does drive the price down.

I've seen this approach backfire, because the dealer says he has the exact make/model as-quoted, but doesn't. Tries to pass it off as a simple misunderstanding, then says "But we have this other one over here which is close to what you asked for..."

IOW, only works if dealer is honest.

In my experience, this usually happens with high-demand cars that are hard for the dealer to get or brands with a limited area presence.

VW has 2 dealers in my region. Want a TDI Jetta with a manual transmission? Let the games begin -- they get 3 a month and the sales manager won't let it out the door for a good price.

Toyota used to have supply constraints for certain Camry models (some trims were made in Japan exclusively a few years ago). Want one of those? Good luck -- my dad had the guy demand a deposit to be on a waiting list, or take a lousy deal on one of the other trims.

Another thing that happens is that dealers need to trade with other dealers for specific cars. Sometimes these deals fall through, and the dealer who promised you a car is actually being honest -- he doesn't have it for reasons out of his control.

Yep this tactic doesn't work well for anyone that wants manual transmission cars in the USA. Most places get so few of them its hard to get deals on those specific types of cars.

I would not have believed this if I hadn't helped a friend shop for a car recently. It was surreal to both of us that his only hard requirement was a manual transmission and, despite visiting every dealership we could find, few had them at all.

Interesting note: Be very careful about believing a dealer's website or phone description of a car as a "manual." We ran into multiple dealerships that misidentified paddle shift or "manumatic"/"tiptronic" cars as manuals.

He ended up with an RX-8, but that's an entirely different set of stories... :)

Same experience here with TDI VWs. Even "friends and family" don't get good deals....you're just lucky to ge the car you want.

> don't get good deals....you're just lucky to ge the car you want.

If the supply of a certain good is constrained, then obviously the value goes up. Simply being able to purchase one is a good price by definition.

That's OK, there are dihonest people everywhere.

The only correct response to such a situation is: "I will tell everyone I know about your tactics, and go with the dealer that was shooting straight."

Then execute on exactly that plan.

Tell them via email you need the VIN

VINs can be decoded to exact colors/features for most makes/models.

Due to the earlier step, you should have more than one place to buy it from?

In other words, go to another dealer.

A common workaround for this is to ask for a VIN.

I've recommended this procedure to several (a dozen?) people and never encountered this. My steps mention a concise and exact list. If they flub this up, they're pretty damned incompetent.

Also, an interesting aside, there's a limited inventory in any given geographic region, so if you match your desire list up with a given VIN, they're usually quoting you on the same inventory item.

What cars were they getting though?

As others have said, this doesn't work for all cars. For less mainstream / luxur-ish cars, there won't be too many dealerships in 100 mi radius that carry what you want. At best you'd get a response that MSRP is this and that, please come in and we'll talk about discounts.

IANAL, but aren't quotes binding? If the dealer gives you a quote for a specific vehicle, that's binding, isn't it?

IANAL either, but it's unlikely that a salesman responding to an email with a price would be binding. It's more likely an "invitation to treat"[1]. Even if it was, technically speaking, binding, it would have to be the deal of a lifetime to be worth taking the case to court.


Easy enough nowadays to just get a picture of the window sticker.

I have seen this method suggested in car dealer AMA threads. None of the sales guy (dealers) said this is a good idea and the effectiveness seemed largely dependent upon location.

> None of the sales guy (dealers) said this is a good idea

I think that's their idea of a hint.

I think that anything a dealer says about buying cars to non-dealers should be looked at with a fair amount of scepticism.

While looking for a flat in Amsterdam one of the agents I got was working for a salary, not commission. She was one exception who told me to talk to as many agents as possible, and not take whatever they tell me to. And yes, the "talk to only one, maximum two agents" was called an old boring story, because sure, they do talk to each other, but they will not treat you worse for it. She helped me in my looking immensely, and while she didn't make the sale, she's also the first one recommended by my company for new imported employees (which we get a lot of), so somehow I doubt her company lost a lot that way.

In fact, I praised her more than the agent I got my flat through, and it's her who gets my recommendation whenever someone asks me.

My organizational behavior professor used this process when he last bought his car.

In the UK, there are on-line services that serve a similar role but with the haggling done in advance. I bought my last car via www.drivethedeal.com, and wound up saving about 1/6 of the best quote I was getting from the local dealerships, which itself wasn't offensive. As far as I can tell, they did it by singling out one dealership in the entire UK that was willing to sell for very narrow, if any, margins, but then generated enough volume for that one dealership that presumably they qualified for perks from the manufacturers or similar.

I offered the local dealers the chance to match the price, but after hearing the figure I'd been quoted, they politely declined. They claimed that they would actually lose money on the sale if they did, and while I'm not an expert on the UK new car market, I suspect given the size of the discount that the local guys were being honest there.

Caution: That was mid-2000s, so any recommendation for that particular deal site is stale. Still, I have no reason to believe they have changed and apparently they're still going.

I used this process to buy my last car. The difference between the lowest two bids was several thousand dollars, and both were far less than I got from casual browsing in dealerships. I had a drive 30 miles to get the car I wanted, and the experience was the best I've ever had, though it will likely be my last. I don't think I'll ever buy a new car again. There are too many deals to be had for slightly used cars.

How do you handle your trade-in (assuming you have one)?

Do you sell it yourself?

A general rule of thumb is that if you have the time/energy, you should always sell yourself and never ever trade in.

Why? Because in the used car supply chain, the trade-in is the start of the chain - the lowest possible price, and the worse possible deal.

The supply chain (in its longest form) looks like this: Used car retailer sells a car (end of chain). He buys the car from a wholesaler. Wholesaler buys a car from an auction. Auction gets its supplies from dealerships. And what cars are dealerships putting in the auctions? Trade-ins.

Now, that chain can be broken at any time -- that's just the longest version. But dealers calculate trade-in prices with the assumption of a worst-case scenario (that they won't be able to sell on the lot and that they'll have to dump it to an auction).

So moral of the story - if you have the time and know-how to sell direct, do it!

If I don't have the know-how, is it worth my time to learn? Does the true difference in selling direct vs. trading in closely resemble the Kelley Blue Book difference between trade-in and private seller amounts of money?

Any tips/insight into selling direct?

I let my girlfriend do it. The last time I bought a car, I decided what I wanted and shopped around the local dealers and got a good offer at $18,000. I told my girlfriend about the deal, and she said, "Way too expensive."

She gets on the web and looks at all the dealer in Northern CA, and finds one of those lo-ball one-only offers in San Francisco. She calls the dealer and gets him to hold the car for her, since we would have to drive 240 miles to get there. Then she starts calling local dealers to find one that would match the offer. The nearest one wouldnt, but one an hour away would. She got me the car for $14,000.

A few years earlier we bought a house and needed a new refrigerator and dishwasher. We go to Sears and find what we want. She then proceeds to negotiate several hundred dollars of the sticker price. I didnt even know you could bargain with Sears.

The downside is that I cant make a simple purchase any longer. She makes me go for the best deal.

I totally understand where you're coming from. My wife does all the negotiating for us. She negotiated the price for the diamond for her engagement ring. She almost walked away from the perfect one because the seller refused to go down another $200, even though she had already bargained down to a great price. I told her "honey, let me handle it, I'll get down another $200." I just gave the seller what she was asking for...

> She negotiated the price for the diamond for her engagement ring.


on HN before:


It wasn't clear in my post--we bought the diamond on the secondary market. Diamonds are like cars in that way--they depreciate tremendously the minute you drive them off the lot.

On the other hand, the stuff about the DeBeers monopoly is quite inaccurate today. DeBeers has gotten in anti trust troubles, but hasn't been an actual monopoly for a long time.

I found the original story quite fascinating.

Do you have a link for updated info about their current practices and market position?

See this article: http://money.cnn.com/magazines/fortune/fortune_archive/2001/.... It's from 2001, so when it refers to things that happened a "few years ago" it means the late 1990's.

Wow. Thanks. No less fascinating than that story from long ago.

The thing is even though diamonds are price-fixed and overpriced, this happens at the source and not the end-dealer mostly. So, it's difficult for you to negotiate with the dealer who has a low margin to begin with anyway.

Wow, stay classy, Jacques.

Happy New Year to you and yours too, Thomas.

Sorry to be snippy. Same to you!

In some cultures, you are expected to negotiate to the point that the first quote you get is not something the seller ever expects to get (even though they do get it from tourists or the occasional local patsy).

The bizdev girl in my startup who grew up in such a culture usually gets 30% of supplier list prices on the first call, and then starts to work from there ... even in the US and the UK where it's not supposed to be that way.

Your girlfriend is a boss.

Does her she work in a field where you especially need negotiation skills?

She's a mathematician and used to teach at Ohio State. A decade ago she switched to being an oil painter and a photographer. She's now teaching herself web development, because she thinks we could use a second income in this turbulent economy.

On top of all that she is a very nice person. I consider myself to be a very fortunate guy.

She combines a number of important skills that aren't often combined. She should do stuff she enjoys, but if she picks up some hard tech skills I think she'll find there is a market for putting all that together.

Some accounting would be a nice add, as it would help her talk with the business types.

If she goes that road I think you had better be able to cook.

Why not use her negotiation skills to turn her photography hobby into a money making venture?

She's building a web site to showcase both her web development skills and her photography. I'm not sure whether she is going to look for a job or go for freelancing, but I think her inclination is to go for the latter. Her photography is much more art than commercial. She will probably pursue that as well.

Art photography, if she's any good, is much more likely to make her money. However, it takes a while to build her name in the art photography world. It's also very difficult because those days everyone's a photographer, and anyone who uses a filter is an art photographer. If she has a solid BFA background and has put in some serious years work then that would be much more rewarding. As HCB said "the first 10,000 photos are your worst". Freelancing in the art world is not easy, there a lot of brand building and making sure she's represented in the right places, obviously the next event that she should consider is Photo LA

Nerd moment.

This reminds me of the part in The Hobbit (the book, not the movie) where Gandalf takes the dwarves to meet Beorn, the skin-changer. Before entering his house, Gandalf warns the dwarves that Beorn is tempermental, and that in order to get him to help them, they should stagger their entrances.

Gandalf initially only enters with Bilbo, but as he tells Beorn about the adventures they have had so far, he repeatedly references an increasingly large number of dwarves. e.g. "You have mentioned a dozen, yet there are only ten dwarves here!", to which Gandalf replies by having two more dwarves enter.

In the end, master businessman Gandalf gets Beorn to house all 16 in their party, by means of exactly this "nibbles"-like negotiation strategy.

I really do think Gandalf has a lot to offer the business community as an astute and personable negotiator.

I really do think Gandalf has a lot to offer the business community as an astute and personable negotiator.

"Wait, no, I have a better idea, how about this. You sell me the gray Prius for 2.5% under factory invoice with the 2% APR financing we talked about earlier, or I summon the great worm Catyrpelius from his resting place in the Abyss to digest your entrails over a thousand years. What? Sure, I'll wait here while you run it by the sales manager."

I'm imagining this whole scenario in his voice. Golden.

I was envisioning exactly this scenario.

If you enjoyed this podcast I can recommend the book "Getting to Yes":


It's a little bit dated but an excellent introduction to negotiation and overlaps with a number of the topics discussed in the show.

http://www.amazon.com/dp/0395631246 (link to the desktop version)

Agreed. This book has made me more money than any other book without exception.

it is an excellent book but I am curious - in what way you think it is dated?

My dad does something similar every few years when purchasing a family car. This is what he does:

1. Decides ahead of time what exactly he wants and how much he wants to pay(via internet, friends etc.)

2. Calls up area dealerships that have the exact model/make

3. Asks them to skip the pitch. No, he is not visiting the dealership. Yes, he is damn serious about purchasing this car.

4. Tells them to write down his number, which is the price he is willing to pay.

5. Requests them to call when they can sell him for that number. Promises to buy it if they do so.

How it works out:

Typically he will get multiple calls back trying to get him to reset his price. He stays firm and politely informs them he is serious about that price and that he is ready to purchase. That part is very important because dealerships get a fair share of timewasters. He usually ends up with a dealership that can chalk up his sale as an easy one even if the margins were low/non-existent.

I'll emphasize that my dad, like the negotiator in the story, will not budge. This is harder than it seems but the key for him is to keep the conversations short and set a no-bullshit attitude up front. He has had instances when the dealership will lure him in and then try to do a switcharoo. He will laugh or express disappointment depending on the day but in either case, he will walk out.

That said, he is a reasonable party. If it is $100 more, he will likely accept it--but even then, only as a final compromise. If it is $1,000 more than his price, he will almost certainly walk away.

Another key point is that my dad does his homework in figuring about the lowest he feels a dealership can go while still having interest in selling it to him.

Also, his being a doctor may help him in being taken serious, though it also makes the salesman more aggressive in trying to get additional $ out of him.

I did something similar with my last car purchase, with a little bit more back-end research. I found dealers with the exact car I wanted on their lot. I put copies of the window stickers of these cars onto my iPad, which I brought with me during the negotiations. I also knew the exact MSRP and margins of each of these cars, as well as the price paid for similar cars in the area (truecar.com was very helpful). I walked into the first dealership and showed them the sticker of the car I wanted and said, "I want this car, this exact car, I'm paying cash, and I want to drive it off the lot today." We talked (argued) for at least 30 minutes about price and they wouldn't come down. At one point there were two other salesmen and a manager at the table with us right in the middle of the showroom - apparently we were the main event. Each of them tried their own pitch (one actually tried to sell me some random used car that wasn't anything close to what I wanted). For each of their arguments I showed them the data on my iPad and said my offer was fair, I wasn't budging. They got angry, they yelled, they called me a liar and a thief and talked about their kids who had to eat. Eventually I just stood up and started walking out without saying a word, at which point they called me back and said they would do my offer. The salesmen tried to give me a pep talk while the GM approved the offer (at which point I caught him in a huge lie and I thought the kid was going to have a breakdown right there). They presented me with a written offer and I picked it up, folded it and put it in my pocket, and said I would be back (they're not supposed to let you out of the dealership with their written offer). I drove straight to the next dealer, presented him with the window sticker of the exact car I wanted on their lot, gave him the offer sheet from the previous dealer and told him I would be paying cash today. 10 minutes later I had the exact car I wanted at the price I wanted to pay. If you're informed and persistent, there are deals to be had. Also, everything you hear about all the tricks car dealers use are completely true, yet not difficult to overcome.

The "huge lie" was about the vehicle? It's not entirely clear why you went to the second dealer after getting the terms you wanted out of the first.

He practically begged me to accept their offer and said I would be helping him out, meaning my purchase contributed to his sales commission. He told me he "was having a really bad month [for sales]" and had earlier on the phone tried to forge a personal bond based on our mutual hometown, despite completely forgetting who I was when I arrived on the lot. The problem was it was July 6th, and because of the holiday, the month had really only just begun. I reminded him what day it was and he admitted his lie. Low offer or not, that statement was typical of the attitude of all the sales people there (who yells at a customer who is trying to pay cash for a car on the spot?). I had already decided I wouldn't buy the car there since I didn't want to reward them for their poor treatment and didn't want to have to return there for service. The dealer I ended up at was the polar opposite - polite, accommodating, and not pressed to make a deal.

To punish them, I think.

"I'll emphasize that my dad, like the negotiator in the story, will not budge. This is harder than it seems..."

I've never understood that. Are most people unwilling or unable to stay firm to something they've decided to stay firm about? I went through this last time I bought a car, and as hard as a Toyota dealer tried to move me on a car he had, I quickly learned that the longer I sat there and just did nothing, the lower the price fell. I ended up not even buying the Toyota - but a car dealer has literally zero power over what I do or where I spend my money.

Yes, most people can be persuaded to do things by repeated requests, even when they think they've made up their mind.

How can he promise to buy if he contacts several dealers? He would only buy from the first one, I suppose.

Sure, I think there is an understanding the first dealer to give him the price will get his business.

That's one of the other ways to get a good price. Figure out what you want, what options, etc. and ring around all the local dealers "I'm going to buy this car at the end of next week, lowest price gets it."

Haven't tried it myself, but apparently it works reasonably well.

The nibble technique reminds me of how clients drive freelance web developers insane.

Well, the reality is that the client has what the freelancer needs: money, so they are always going to be in the position of power in the negotiation.

The only way to take the position of power is to not need (much) money, which leads to the ironic situation where, by not needing work, you end up getting paid more for it. Call it the Paradox of Need, you can see it in many different socio-economic situations.

The fact that living a low cash-burn lifestyle also improves you morally, is environmentally positive and gives you personal freedom are side benefits to this approach.

Well, the reality is that the client has what the freelancer needs: money, so they are always going to be in the position of power in the negotiation.

OTOH, the client is talking to the developer because the developer has something the client needs: skills to provide something of value. It helps to (politely) remind clients that they are free to spend more time looking for a less-expensive developer while in the meantime nothing gets done and the client possibly loses money, or loses an opportunity to make money, and may then still end up with a less-skilled developer who will not deliver adequate results.

The only way to take the position of power is to not need (much) money, which leads to the ironic situation where, by not needing work, you end up getting paid more for it. Call it the Paradox of Need, you can see it in many different socio-economic situations.

I and many friends have found that best time to find a girlfriend is when you have girlfriend. Some goes for finding a job; it's better to currently have one while looking. Partly this signals capability (i.e. There must be a reason you do not have a job/girlfriend|boyfriend|whatever, even if I can't see it), partly it allows you to act with some (possibly attractive) aloofness.

So if you can act like you don't need the job/money/whatever then you can gain an upper hand.

I'm not a big fan of fronting in order to start a relationship, and if I got the feeling that a possible client was going to try to weasel me on cost because they think having money makes them the boss then I'd seriously consider walking away. Of course, if I was in fact in serious need of money then the game changes, but past experiences tells me that clients who are lording money over contractors are a big risk of refusing to pay.

For a time I shook my head at the irony that the smaller the client and the smaller the job, the higher the maintenance and the harder it was to get paid. The nickel-and-diming, the offers of creative means of payment ("I'll take you out to a nice dinner!", "My wife makes fantastic cookies!"), the weekend calls to the cell phone. Of course, I later came to understand that this wasn't ironic at all.

The best predictor of how "difficult" a client will be in this dimension is the degree to which the person you deal with is paying with what they perceive as "their own money", literally or figuratively. A client selection strategy based on this observation dovetails nicely with the "charge more, much more!" approaches frequently discussed on these pages.

>>OTOH, the client is talking to the developer because the developer has something the client needs: skills to provide something of value.

Yes, but freelance developers are a dime a dozen. Therefore clients will always have the upper hand in business transactions.

> Yes, but freelance developers are a dime a dozen. Therefore clients will always have the upper hand in business transactions.

Once you finally accept that clients are also a dime a dozen too, it'll become a lot easier to only accept the good clients, and only accept good pay.

good freelance developers though, are rare as hen's teeth.

It helps to (politely) remind clients that they are free to spend more time looking for a less-expensive developer while in the meantime nothing gets done and the client possibly loses money, or loses an opportunity to make money, and may then still end up with a less-skilled developer who will not deliver adequate results.

the client has what the freelancer needs: money

And the freelancer has what the client needs: the ability to make a web site.

A transaction happens when both parties believe they're better off with the result: the freelancer wants the money more than the time, and the client wants the web site more than the money.

I disagree that clients have the position of power. The nibbles in freelancing usually come towards the end of delivery, rather than the start when the project scope and costs are negotiated. This means the freelancer has the power, because the client still has to pay for the services already performed.

A good freelancer will always have power in a negotiation. There are a lot of average freelancers.

But it's also true that the designer has what the client needs: web design ability. So why would we automatically assume a power imbalance?

Which in turn reminds me that project managers working with freelancers are often far, far better at negotiation than are the freelancers.

This makes sense considering most PM's I know used to be in sales. Funny thing, after spending many years in sales before becoming a developer, I can see these techniques coming a mile away.

Sometimes I employ "power negotiating" skills and have some fun just to stay sharp.

Here are some of those techniques: http://www.negotiatingguide.com/negotiation/powerarticle.htm

To your point, early in my career I made way more money working through a middleman than I did freelancing directly for clients. It was also much less stressful.

Interesting. When I was doing more client work I wanted to do something like that, but was never able to suss out exactly how to find such a middleman. I was a lot younger and (I'd like to think) less savvy then, though.

I do most of my work through agencies in Austin, TX...

It took about a year to build up a good hourly rate reliably... this was done mostly just by being fast, available, and good and always keeping an eye on the next project.

At this point, I know several people who are able to make money off me, and that has always been my goal as a freelancer, more than anything. The agencies I freelance with all recognize that I'm as reliable as an employee but far cheaper as far as total cost, so they have a better margin on work they do with me.

And even though I'm charging quite a bit, since they are charging a markup on my time... well, it's just a lot nicer for everyone. If I raise my rates, they make more money (within reason, of course).

True. If the freelancer treated the nibbles as a negotiation instead of requests it might go a lot differently.

Slightly misleading, because there's only audio of him talking about it, but no audio of the actual conversation.

That bothered me too. Any educational value this might have is in the subtle details, and they left all of those out: no audio/video, no numbers, and we don't know what both sides knew before the negotiation started.

It's basically as educational as anyone at a cocktail party talking about the good deal they got on a car. Except in that case, you'd at least get the numbers.

He did get quite an impressive result, though, and there's some interesting (to me, at least) discussion of negotiating tactics that people who do this stuff for a living actually get taught.

Without knowing the invoice value of the car or what he paid, there's no way to know if he got a good deal. There's a good chance he still overpaid for that car. I worked at a car dealership for a summer. There were plenty of times when a customer would start off with a reasonable offer but we'd still negotiate back and forth multiple times. We did this not just to increase our profits but also because we wanted people to walk away feeling like they'd won. If the sales guy had accepted his first offer right away the customer would have walked away feeling screwed (which is bad for repeat business and referrals). My job was to make everyone walk away feeling like they'd out-negotiated me. In reality, no car would leave the lot unless the dealership was making money. This doesn't discount the value of the technique, just remember car salesmen also negotiate for a living.

Worth noting here that "invoice" is a meaningless number too. "The dealers are provided with incentives by the manufacturers", which is another way of saying that the invoice prices are a fairy tale. Invoice is the new sticker.

There's a pretty good EconTalk with Russ Roberts talking about the fine details with a dealership sales manager. You have to read between the lines (Roberts is not such a great interviewer that he gets a car salesman to torpedo their own best interests) but it's pretty illuminating.

As in all things, it's mostly about the market. There are makes/models where sticker isn't even the real sticker; for instance, cars with waitlists are unlikely to get purchases under sticker. On the other hand, you can capture much of the dealer's incentive if you choose the right time of month to make an offer on a car the dealer would like to get off their lot.

They said he tried other dealerships and couldn't get such a good deal, so presumably there wasn't much left in it for the dealership.

I don't have experience in a lot of negotiations but I have used similar methods many times. I bought a bike a couple days ago and got them to throw in a few extra things for free. I didn't negotiate the price of the bike but I made a point of needing a light and a helment.

First, I asked for a light that would be go great with the bike and the sales person put one he had laying around on the bike. I said it looked great. Then I asked for a helment and found one for me that I liked. I put on the helment and did a test ride with the bike. I told him I'll take the bike. Then I asked, how much for the helment & light? He gave me the price. I said "That's not bad but honestly, I don't have the money for everything. What can you do?" He offered to give me 20% off the helment & light. I again said that was a great deal but couldn't do it. A few more back and forth and me throwing in that I would need another bike (for my gf) and wanted to come back and buy from him, he eventually threw in the light and helment.

What I knew was roughly how much profit they were making from the bike. I knew roughly the mark up of accessories and I knew how they wanted to sell the bike.

It worked out really well for me and the business. I love the bike and the business now has a new loyal customer.

I bought a bike too last year. I paid list price, had them install kiddie seats, I paid list for those too.

The last place I would drive a hard bargain would be in a bike store.

For one, I can afford the bike + extras, otherwise I wouldn't go out to buy it, we're talking relatively small money here. I simply set a budget and didn't exceed the budget, which may have influenced my choice of bike but that's fine.

When I went back a few weeks later with a small problem (crank play) the guy instantly dropped what he was doing, fixed the problem immediately (obviously no charge) and asked how my kids liked the bike. We talked for a bit more and he asked me to come in any time there is anything wrong with the bike right away.

I love the bike and that guy running his small business.

I wonder how he would have treated me if I had decided to haggle with him over the price of the seats or the bike using my negotiation skills. Relative to my income that guy is working a lot harder for a lot less.

Maybe my perspective about bike store owners changed when I worked for a bike store when I was 15 (newspaper route + working in the bike store paid for my first computer).

Car dealerships I approach in an entirely different way.

I'm not sure if you've ever been to a bike shop when they are having a sale. The bike shop I was at had some bikes listed for $999 on sale for $739. That's more than $200 off a bike and they're still making money. The guy selling me the bike doesn't lose that $200 difference. They are making higher profit ratio on a bike than a car dealership does on a car.

If you get treated differently if you have issues in the future because you bargained then that's an issue with the business not the price you paid.

Btw, I paid full price for the bike as it wasn't on sale. My guess is they made 30% profit from the $800 purchase.

> My guess is they made 30% profit from the $800 purchase.

No, they made a 30% gross margin. Their profits would likely be substantially less.

It's more likely that items on sale are sold at a net loss. The cost of simply having stock is more than you'd think. As an example, I ran an ecommerce site for a hardware company and after 30 days in stock laptops were no longer profitable, even if sold at full price.

My understand is that bikes have a pretty slim margin and stores make their money on accessories and servicing.

You got it just about right. Bikes now have annual updates, just like cars do. Any bikes not sold end-of-season will be worth roughly their second hand resale value the next year. Hence the stock clearance sales. This effect is stronger for racing bikes and mountain bikes than it is for evergreens (for obvious reasons). If a bike store is borrowing at 7% (good deal with the bank) to buy their stock then a $500 bike that retails for $649 (30% gross margin) will have cost the store ~20 bucks in interest after half a year. If they sell it during clearance they will probably drop the price to $549 or $499 depending on how much inventory they have to move. At $550 they're still making some money, at $499 they're losing.

And they still have to put the bike together, give it the '0' service (mostly checking if everything is tight, re-inflating tires and setting it up for the customer) and a warranty. And clean it up after every jerk that goes puddle hopping with a new bike during their test-drive, after which they won't buy it.

There is not a whole lot of money in selling discounted bikes.

Then after the first year you have hopefully a loyal customer that can't fix their own punctures and that keeps coming back over a long time for fixes and eventually an upgrade. It isn't rare for a sale to make more on accessories than on the bike itself, compared to the price of a bike a bag set, seats, lights (usually mandated by law to be on every new bike) and clothing are sold at much higher margins.

How do you know they were still making money on the $739? How do you know the bike manufacturer wasn't offering incentives, much like with a car dealership?

It's a business - you don't sell stuff if there is no money in it. It made you more money being out of the store for that price than sitting in the store... whether it was through rebates from the manufacturer, some contract deal, etc is irrelevant - the business made money.

Not necessarily true. Old stock is sold at a loss quite frequently because keeping it will cost even more than getting rid of it. Space is a real problem in bicycle stores (and capital an even worse one) if you can't show next years models in March then you're not going to be selling any bikes at all.

You have sentimental feelings towards bikes shops and feel good about paying full price. I can understand that. But, I don't see why you should criticize leak for not having the same feelings. Lots of people work hard and make less than you do (many car dealers included). It's not the consumers job to worry about whether the other side is making enough profit. Businesses can take care of themselves. Sometimes they won't sell at a low price because they don't want to set a precedent for negotiating. But, often times, it's profit-enhancing to price discriminate a bit and charging the rich guy full price while throwing in some free accessories for the frugal guy. There is not need to guilt trip the frugal guy about it.

> But, I don't see why you should criticize leak for not having the same feelings.

I'm fine with his haggling. My time and the way I'm perceived by the store owners of the places where I shop is worth more to me than I could ever gain by haggling over the price of a bike. Leak and I are in that sense not in the same position. I also think that if I want to keep that store in business by the time some warranty issue rolls around that I probably will have to let them earn some money. (the dutch word for that particular feeling is 'gunnen', this doesn't happen often but I haven't a clue what the proper English translation is).

He gets to do it his way and I do it in mine. Any guilt complexes are on account of their respective owners.

FWIW, the FBI agent's favorite car color, salsa red pearl, offered by Toyota:


FBI hostage negotiator is given the feeling he just made a good deal. Salesman pockets his commission, dealership sells a car and makes money. Everybody happy.

This is why I generally dislike salespeople, marketers, and lawyers (especially divorce lawyers).

If anyone in a deal is walking away happy it means some other party is suffering whether they know it or not. Any equitable deal is one in which every party is just a little bit unhappy and accepts it for the greater good.

What the aforementioned practitioners do is to convince someone that they are happy and the further they can push them away from reality the more advantage they take. Usually if not always a false scarcity of information is employed.

Tim Ferriss is the worst kind of con artist in the regard.

If anyone in a deal is walking away happy it means some other party is suffering whether they know it or not.

Ideally (and typically, else markets wouldn't work!) both parties walk away happy. Who's suffering when both sides feel as though they've gotten a good bargain?

>Tim Ferriss is the worst kind of con artist in the regard.

Well, maybe I'm old-fashioned but I'm pretty sure the "the worst kind of con artist" cons people out of hundreds of thousands of dollars and gives them nothing. Even if you posit that the content of his books have zero use value (I'm not sure I agree, but I don't really care to argue either way so let's just assume this is the case) and that they also have zero entertainment value (I disagree, but taste may vary) then the worst he's done is... taken your 20 bucks or whatever and sold you a disappointing book in return.

Any equitable deal is one in which every party is just a little bit unhappy

Then I don't want to live in an equitable world. Sounds like an equitable world means everyone is always just a little bit unhappy.

Which is counterbalanced by the happiness found in collaborative aims achieved by negotiated, equitable unhappiness. Kind of the definition of work I suppose.

Everyone wants to be happy; the extent to which we do so at the expense of others is pretty staggering in recent history.

Oh yes, because before modern days we were so much more empathetic and loving of our fellow man. Fiefdoms are an excellent example of this...

Only if they make deals all the time!

If you haven't read it yet I can really recommend the book "Getting more" by Stuart Diamond. He covers all of the techniques mentioned in this talk and much more, with hundreds of brief examples from the everyday life's of his students and himself. It takes training and time to apply these principles (at least for me) but it has transformed how I think about everyday negotiations. Amazon link: http://www.amazon.com/Getting-More-Negotiate-Achieve-Goals/d...

I negotiated my last truck purchase by text message. I drove the salesman nuts by not responding quickly. I was at a happy hour in a pub, so I would only respond once per beverage. I got the price I wanted with no hassle. I avoided going to the dealer, they delivered. I avoided the dreaded Finance and Insurance guy that always tries to upsell, and I got them to buy the interest rate down too. The best part was the lack of stress for me.

Bought from a guy on craigslist '00 Chrysler Concorde 3.2L for $2000 back in 2009 when we just moved into USA and desperately needed any car. Still drives. This car has really nice leather interior, huge trunk and actually is quite reliable. But because it is "domestic junk", price was very low. I am going to drive until it dies. And once it die, I will buy another "domestic junk" car and will be driving it for next few years :))

Information is Power==Money!

One thing I always believe helps is having information about the thing that you want to buy. For eg:- If you know that the car that they are trying to sell has been sitting in the lot for more than 2 months, then you know they are desperate to get rid of it, so you can come up an appropriate(much lower) ask price!

In all fairness, adding in the nibbles may annoy or piss of the person you are dealing with(in some cases). In a way, you are sort of pushing them into a corner.

However, expanding the pie and looking out of your tunnel vision is a useful hint!

Also, in the case of FBI negotiator, not everybody will let you sleep over their offer when they have matched your ask price without you giving them any wiggle-room.

Techniques explained in NPR episode:

1. The "Nibble" - ask a little more into the offer, especially if not directly related.

2. "Best Alternative To A Negotiated Agreement (BATNA)" - ensure there is a viable alternative, preferably before negotiation.

3. "Expanding the Pie" - offer can be often improved or agreed on parts of an item or service rather than assuming it applies only to the whole.

4. "Bracketing" [my term] - offer low to point of anger but not withdrawal, then praise counteroffer and negotiated item/service while claiming cannot afford counteroffer.

5. "Defer Immediate Agreement" [my term] - on best offer, defer immediate agreement with any reason so can gain time to check the offer or for other offers.

The last time I bought a new car, I used AAA's prenegotiated purchasing service: http://www.aaa.com/AAA_Travel/NewCar/buying_car.htm (this was in california; it doesn't seem to be available everywhere). So I don't have a cool story or any tips, but it was about the least stressful purchase I've ever made and was done pretty quickly.

Good examples for the discussed techniques.

I am actually surprised though, that the car sales man didn't ask how much he could pay. If the FBI negotiator still stuck with his initial offer, I guess he would have suggested some kind of monthly rate or a similar kind of loan that would "fit his lifestyle better".

The way we bought our last car was much simpler (not sure it was better, but i don't know if i could pull it off). We picked the car we wanted and then emailed every dealership within a hundred miles what we wanted and asked for quotes. Once we had quotes we liked we treated the tradein as a nibble. Best car buying experience ever.

Did you use CarWoo or did you do it manually? This is a smart approach because it's the only realistic way to comparison shop with dealers who are trained to slow you down and drag out the process before giving you a number.

Did it myself on the advice of a friend. It worked like a charm, no bullshit involved on either side.

Funniest thing was we had gone to a local dealership to attempt a test drive and they wouldn't even talk to us. The guys who won our business then sourced the vehicle from that same dealership -- they drove it up to our house with the local dealer's plates on it, for something like $6k less than the dealer's sticker price.

I left out one detail -- we ran our offer past the other dealers who had responded and none would match it.

But then, when met with disarming empathy, what do you do if you have no backup? Walk-away?

Sure. Your batna of last resort is 'no deal'.

the "nibble" reminds me of scope creep. :)

Very interesting. Being from the UK, I've never listened to NPR before (aside from the Tiny Desk series), can anyone recommend some good weekly shows worth listening to?

Depends what you're after. Some of the programming is quite similar to Radio 4 - the daily 'Morning Edition' is basically 'Today', 'All Things Considered' is 'PM', and then there's 'Marketplace' (no prizes for guessing what that's about!). Outside the daily news shows you've got:

* Wait Wait...Don't Tell Me, basically the US equivalent of Radio 4's News Quiz

* Tech Nation, the title of which should be fairly self explanatory

* Car Talk, a call-in show about cars. I am not a car person, and I enjoy it (the show stopped production a few months ago, but should be widely available online)

* This American Life, does eclectic long-form journalism.

* Science Friday, which is part of a daily call-in series Talk of the Nation, but all about science.

If you're into science and tech, Radiolab (radiolab.org) is also well worth a listen, it's not technically NPR (there are several different public radio groups in the US), but it uses really innovative production and I wish Radio 4 would broadcast it here in the UK!

Hopefully other people can add their own favorite shows...there are quite a few of them, and I've just highlighted a few that I find interesting as a Brit. I'm in the US a fair bit, and tend to listen to public radio where I can so these are all shows I've just stumbled across and enjoyed.

I love the News Quiz, so I'll give Wait Wait a go, and I'll give This American Life and Radiolab a go, they both look great

This American Life isn't technically NPR either.

For business and economics, go for Marketplace (daily), Freakonomics Radio and Planet Money. For pop-science and tech, maybe Radio Lab and Science Friday. Other popular shows are This American Life, All Things Considered, On The Media, Splendid Table, etc, etc.

Directory: http://www.npr.org/rss/podcast/podcast_directory.php?type=to...

Various show pages:





Thanks for the suggestions, I've subscribed to Freakonomics and Radiolab.

I'm a huge fan of these two shows:

On Point - Two hours daily that has lively conversations that cover everything from breaking news to ancient poetry, and features writers, politicians, journalists, artists, scientists and ordinary citizens - http://onpoint.wbur.org/

To the Point - A news based one-hour daily program that focuses on the hot-button issues of the day - http://www.kcrw.com/news/programs/tp


Not a NPR show but 99% Invisible is excellent, short show about everyday design http://99percentinvisible.org/

This sounds pretty good, thanks for the suggestion.

For those who have purchased a house before (I may be about to start the process) do the same techniques apply, or is it a different ballgame?

Yes. I bought my house when the UK market was still booming, and sellers were used to houses going substantially over the advertised price. Instead we negotiated 10% off the advertised price, and I don't think we did particularly well even though the estate agent we dealt with seemed rather shocked to get an offer that low. In terms of picking the area, we did well - current value has increased at least 10% more than the average for London in the time since we bought.

We could likely have started lower, and we messed it up by using some repairs that needed to be done (that were clearly priced into the advertised price) as an argument for dropping the price when we ought to have been able to get that price drop and make the offer contingent on the seller having some of the repairs done on their dime.

The key thing is to be able to move quickly. They picked us because the alternative would have been to wait for other offers, while we turned around and started negotiating as soon as we were sure, offer an agreement in principle subject to a survey right off the bat if they could meet our price, had an agreement in principle from my bank, and had been renting so we stressed that we could move on everything immediately.

If you can stress to the sellers estate agent in particular that you can move quickly, keep in mind that it will be in their interest to get a quick, trouble free sale vs. hanging on for weeks for 10% more commission, and that will influence how they deal with their client (conversely, it is in your interest whether selling or buying to be very wary when an estate agent pushes you to accept an offer - there's been some survey where it turned out estate agents typically hold out longer and sell for more when selling their own houses than their clients do).

I purchased my home in an oldish (early 1920's) area a little more than a year ago. We knew exactly what we wanted and that helped tremendously:

* Price we were willing to pay "out the door" (a hard, absolute max that wouldn't leave us in dire straits if one of us lost our job) * How much work we were willing to do after the sale * Tied in with the above, a minimum 1-year, preferably 2-year warranty on major repairs paid for by the seller * Within a 30 minute rush-hour commute to the furthest employer * 30-year mortgage that we can afford to pay off in 15 years * Any school district except the worst few in the area (no kids yet, but this is our first home and we'll have it 5-10 years; when we move kids will be just entering the equation and we need to plan that we may not be willing or able to move)

As with any negotiation, the most important thing is knowing exactly what you need, what you want, and what you can (and will) spend. The hardest part (for me anyway) is getting a deal that is everything I need, most of what I want but is 2% more expensive than my max and still being willing to walk away.

The market is in your favour right now, but in houses 'location, location, location' still holds true. It also very much depends on where you're buying.

The main principles of negotiation (take your time, set yourself a price and if you can't get it for that price walk) apply. But there may be a scarcity of offerings that suit you, a place may have extra perks (location near water / the beach) and so on.

The most important facts about buying a house are how long it has been on the market and what it was bought for. If you can't figure out the latter you may be able to make stab at it by comparing the market development relative to when the house changed hands last and what was done to improve it since.

Happy house hunting!

It really, really depends. Mostly on the area you're looking at. A lot of people say it's a buyer's market, but that's only really true in some places -- even at the height (pit?) of the real estate crash a good house in a great location was never 'cheap'.

Silicon Valley is a very, very hard place to buy a house right now -- inventory is crazy low.

For the last method, it is difficult to find the line between finding the best deal vs. offending the seller so they move on to another buyer.

All those guys teach negotiation at university but never attended that class in my CS degree.

Any book or online class recommendation?

if you're really interested in negotiations, i recommend beyond reason by roger fisher and daniel shapiro

Any opinions on carsdirect.com?

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