Tuesday, 1 May 2012
There's no “one right way” to decide on pricing, but…
A myth often believed by sellers is that if they set their price high, they can always drop it. When a buyer sees a seller come off their price, they often view it as a sign of weakness and leverage it to get an upper hand in the negotiating process.
Also, think of personal shopping experiences. Have you noticed how products that have been sitting on the shelf get ratty, dusty and no longer look appealing? The same thing can happen with a business that has been on the market for a lengthy period of time.
Conversely, buyers need to understand that making a “low ball” offer with the belief that they can always go up may not be the best negotiating strategy. Although this strategy may be partially true, buyers need to think of the “cost” associated with this strategy.
Making such an offer can create hard feelings and resentment with the seller while eroding the credibility of the buyer. Since there are many similarities between a business transaction and a marriage, resentment is not a recommended first step in any type of courtship.
When it comes to negotiating, buyers and sellers need to focus on the issues that are important to them rather than details that are not critical.
When both the seller and buyer focus on the issues at hand and stay away from myths, common ground can usually be found that gets both parties what they want.
Do you have small business questions you would like answered about this article or others? Please visit www.VRWindsor.com or call 519-903-7807.William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.