Learning about negotiation is one of those culture-shocking things. You start seeing underlying patterns and trends in life.
It can be painful for a while, when you see all the things that went poorly, that you did wrong, or techniques and tactics that were used against you in the past.
It can also be pretty damn exciting, because then you start to feel armed and equipped. A lot of things in life are negotiable, far more than most people think. And the vast majority of negotiation gives you options to have pleasant interactions that both sides walk away feeling good from, especially if you're savvy about it.
But some negotiation techniques that work effectively aren't really honorable under most conceptions of honor, aren't good to the other side, and... yet can be highly effective.
One of those that goes by many different names is the "nibble" or the "chisel" -- as soon as you have agreement in principle, or even a contract signed already, they'll push to get a bit more, and more, and more.
It's surprisingly scarily effective. Right when a deal is done, you say, "Oh, and of course that includes XYZ right?" The most commonly given example is when you buy a car, you get them to throw in a car wash, full tank of gas, and to pay any inspection fees. Or when buying a home, you get tools or furniture thrown in.
Even once you're aware of this, it's a highly effective technique. I was selling a bunch of office equipment off, and the woman buying a computer for 1700 RMB ($270 USD) brought exactly 1600 RMB with her in an envelope ($254 USD). She also tried to get me to thrown in a computer bag with "Please bring a computer bag."
It's hard to process those situations quickly on the fly, and almost everyone has a natural urge to compromise. She got no computer bag and maybe didn't actually want one, but I took the 1600 even after we'd agreed 1700 on the phone.
Taking that 1600 just straightup cost me $16 with nothing in return, for literally 10 seconds of non-thinking. If I'd say, "Hey, we agreed to 1700 and that's really all I can do. I'm sorry, this is such a good deal, and I really need the money for X" -- she'd have taken another 100 RMB out of her wallet. But a failure to say three sentences cost $16.
You can say "So what?" but that's exactly why this works. And if you get routinely get 5% to 10% of your gross knocked off when you're selling after you've already got a deal, you wind up a lot poorer in the end.
Yet, I'm actually grateful for the experience, because the only way you can learn how to handle that when it comes up is to have it happen. $16 is a cheap lesson to see a firsthand excellent example of the "act like it's fait accompli, be sweet when asking, and nibble" works to put a lot of pressure in people. It's good to see more examples of it, and reason through the countermeasures.
Yet, this bears mentioning if you start trying to understand this stuff -- as effective as nibbling/chiseling can be for one-time transactions, it's disastrously bad to do in two particular cases. First, if you want a longer-term relationship, it makes you known as someone who is a pain in the ass. You can probably get away with doing it once or twice, but if it happens all the time, you wind up with worse service, worse priority, and less goodwill overall.
The second and equally important case is to never, ever do it is when you're getting an exceptionally good deal.
I saved this story for a while, until the dust had cleared. Some months ago, I and a business partner put in an aggressively low bid on a contract with a potential new client we wanted to establish a relationship with. I liked the guy on a personal level, but he's a damn aggressive chiseler as you'll see in a moment.
After our already below-market bid, he said, "Actually, we have two business locations. If we wanted your service done twice, how much more would it be? Maybe 10% more?" In reality, it was close to double the work. At least 70% more, even once you have the problemspace figured out.
But, relatively hungry and in a slight lull of business, I came back with, "Let's do 50% off the [already considerably below market price] on the second one."
He had just nailed a really good deal. Okay, it brings in cash for us and gets a new client, but it was a mistake for me to do that. I should have held with, "I'm not even sure we could do that same price on the second location, but we can try. Let's do a first job together first and see how it goes." The price was too low, arguably, and he'd already cut exactly down to my personal indifference point.
You know how negotiation books tell you to try to figure out the other side's bottom line, their real one, the one they won't go past?
He found mine. He nailed it.
So we go to get underway on the job, but two things happen -- first, a lot more business came in during the interim. Second, he chisels again, "Oh, and just these few other things." He actually does that to scope-up a couple times.
Every time, these are so seemingly minor that they don't matter, and screw it, we'll do it. There's a lot of potential future business here, and we're already through the sales cycle. Besides, chiseling aside, I actually like socializing with the guy.
This is where it would have been very, very wise for him to be extremely accommodating. He'd won, big time. He was getting some amazing things for the business he was in with his son. At a ridiculous price, he couldn't get it elsewhere.
He messed it up for himself, though. It was happening gradually over three weeks, and would have concluded in about six weeks. We could have deathmarched the project faster, but it would have meant alienating our other clients who we have longer-term relationships with, have done more business with, and so on.
And he was pushing the pace heavily. It didn't make sense to me -- he'd had no urgency for a long time and it had taken a long time to close the sale. Now, the world seemed on fire. And there didn't seem to be any reason for it.
Then I realized what was going on -- while he was very slow in buying originally, but now was pushing the pace aggressively, I was puzzled a little bit. But with some thought, it made sense: he was going to create a new issue out of nothing ("not going fast enough") and then trade that off in negotiations for... more whatever. Some of his actions and his tone led me to suspect he was going to refuse to pay the second half of his invoice after everything was complete.
After all, he'd already chiseled 5-6 times.
And you know what we did?
We took a sunk cost, wrote it all off, refunded his money, and let him keep what we'd already fully deployed at no charge. And then we put the time into better projects with customers we had better relationships with. He and his son lost a lot of bottomline profit on that.
I should have pushed back and held firm on scope earlier, that's true, but it's a difficult thing to do at times. Most people want to behave in a pro-social way, and when people make a not-too-much-more request, the default is to give in. That's why veteran negotiators take advantage of when they deploy techniques like that.
Learning how to chisel or nibble is like the Dark Side of the Force, but you have to use it very judiciously if you start trying it. It's a useful tool in the toolbox for some situations, but a terrible tool to use exclusively. It works fine for throwaway negotiations where you never see the other party again, but absolutely must be avoided if you're looking for an important productive long-term relationship, and of course -- when you've already gotten an amazing deal.