Stefan Drew - The Marketing Magician

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Stefan Drew - The Marketing Magician

Negotiation Skills: Splitting the Difference

Splitting the Difference is a Tactic Many Buyers Try When Negotiating the Price Down


Picture the scene. Your buyer has offered 800 for your product and you say you want 1000..  They say this is too high .  So do you drop your price or stand your ground?

The buyer then says, “Let’s split the difference”.

At this stage it means their offer is 900.  The problem is that emotionally they are asking you to show good faith and it is easy to be tempted by this.  A lot of people hate negotiating and it is easy to cave in and find it easy to accept this figure so that they don’t have to continue to negotiate.

Many people find negotiating so uncomfortable that they will accept almost any price, including the split the difference figure so that they don’t have to feel uncomfortable.

The problem is you get a lower price than you want .. or could get.

So what do you do?


How Do You Get The Price You Want in Negotiations?     

At this point you should be aware of your “walk away” figure (the figure where you literally walk away from the deal), your other options and the buyers other options.

They may have to buy as they have no other suppliers that can provide your quality .. or they may have plenty of options. How about you?  Have you plenty of buyers or are you desperate to sell at any price (I hope not).

Here are some possible answers that you might consider, subject to the actual situation.  

If anything less than 1000 is not an option you have to say so and be prepared to walk away.  After all  a deal where you lose money, is a deal you don’t want.

If you are prepared for a lower price then there are other options.  You can say that you can reduce the price slightly but only if the specification of your product or service is changed and ask what they are prepared to negotiate on this basis.  You might then strip out some of the after sales or change delivery options or payment terms; you have plenty of possible options here. This will often stop the “split the difference” onslaught and change the momentum from price back to spec.  If they don’t want to change spec then you can proceed talking price but with a changed dynamic.

Alternatively you could say, “So you are suggesting 900, is that correct?”  Then you say you can’t do that, but could split the difference between their 900 and your 1000. This then puts the onus on them to show good faith.

The thing is you have lots of options, not just the ones I mention above.  Think through the options BEFORE the meeting and come up with a game plan.  Be prepared to walk away if you need to but, whatever happens, keep control of the negotiation.    

This rule was taught to me by a man who is made several £million buying and selling houses.  He always told me that the most misunderstood rule when negotiating centered around splitting the difference.  Getting it right made him a wealthy man. 

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