The Sales Explanation and Negotiation

By Bob Morrell on August 19, 2019

There’s a famous scene in ‘Peep Show’ where two of the characters, Mark and Super-Hans are at a country pub, trying to get a late-night cab back to their hotel. Mark is on the phone to the taxi company, and he says this line’ ‘No, no that’s fine, thanks for explaining to me the economics of running a rural taxi company, which is clearly why it’s impossible for us to get one at this time of night… ‘.  They eventually cadge a lift.

I was reminded of this over the weekend. We went to buy a new car, and the gentleman did a very good job selling it to us. When we sat down to negotiate the price, my wife made her first offer. We then got a polite 5-minute lecture on the economics of running a car dealership and how the margins were much tighter these days. This was initially used to explain to us that the price was not negotiable. I wondered if this was what he meant, so eventually said, ‘Okay, fair enough, so what could you do?’ The chap then promptly lowered the price!

On reflection, this tactic is quite an interesting one. Someone makes you an offer. Instead of saying yes or no, you explain the way your business works, hoping that explanation will mean that they modify their offer. You’ve not said no exactly, but you’ve put an invisible line in the sand which means you don’t have to bounce back an immediate counter offer, in fact in most cases it might raise your buyers first offer – provided the explanation is good enough.

I personally think this is a bit of a cop out – there are certain things we will always negotiate on – cars, houses, insurance, etc. So that being the case, why don’t we create prices which already have that negotiation built in? Apparently with cars, because of the internet this doesn’t work – the price needs to be competitive to get people to come and have a look anyway. Regardless, having an offer and counteroffer negotiation is FUN.