Law of reciprocity

How does it impact a concession to split the difference?

If someone does something nice for you there is a psychological impulse for you to do something nice for them. A strong desire to reciprocate.

Professional buyers are familiar with the law of reciprocity. Strategic concessions at the right time will inspire the spirit of reciprocity and can be effective in negotiating the best deal for both parties.

Example of Law of reciprocity

Have you ever had someone hold the door open for you as you came to the entrance of a building?  Did you find yourself holding second door open for them? If someone does something nice for your there is an impulse for you to do something nice for them in return. The same can happen in a negotiation and  it often influences the concessions that are made.

Be prepared and be aware

The law of reciprocity in negotiations can be used for and against you. Your best defense is  being prepared and being aware. Don’t wing it. Once example is accepting a concession to “split the difference.”

How do you respond in a negotiation when your counterpart offers to “split the difference?” The offer suggests you give a fair play response, by “meeting in the middle.” This makes good business sense only if you are prepared for it.  Identify your negotiation range. The range between “no deal” and your “best deal.”

  • Never accept an offer that is worse than one of your alternatives
  • Identify your best deal. That is the offer that is at or above your highest expectations

Splitting the difference example

You are selling a vase at the local flee market for $100.

A potential buyer asks if you would sell it for $30.

You respond, “I would consider $60.”

Your counterpart suggests “let’s split the difference.”

Once your range of potential agreement is lower, splitting the difference leads to a lower negotiated price. In this example at $45

 

Take the same scenario with the same vase at  $100.

A potential buyer asks if you would sell it for $60. You counter offer $80.

In this scenario splitting the difference delivers an outcome of $70.

Your response to the first offer makes a difference

  1. Identify your best alternative to no deal. That alternative where you will walk away from the negotiation. You always have alternatives. Never agree to a price that is worse than one of your best alternatives.
  2. Be sure your price is based on reliable and accurate Be prepared to explain and clarify the value of the item.
  3. Make small incremental Just because an offer is significantly lower than your asking price it doesn’t’ mean you have to make an equally large concession.
  4. Your concession doesn’t have to be on the price. Identify other types of concessions. Do you have something of value to add to the negotiation? In the flea market example, a second vase or similar decorative piece? In a business negotiation think about delivery, payment terms, or additional customer service as concessions.
  5. Never let your counterpart ignore or downplay your concession.

Be prepared and be aware. Strategic concessions at the right time will inspire the spirit of reciprocity and is an effective tool. Use it with the intent of negotiating the best deal for both parties.