I’ve got a quick, super useful tip for you today: Ackerman bargaining. It’s a rule of thumb that could save you quite a bit of money over your lifetime, and all you have to remember is three two-digit numbers.
Whether you love to haggle or can’t stand it, chances are you have to negotiate a price from time to time. Perhaps you’re in the market for a used car, or maybe (like me) you do a lot of your shopping on eBay using the “Make Offer” function. Regardless of the specific context, you’ve probably wondered, “How much below the asking price should I offer?”
In Never Split the Difference: Negotiating As If Your Life Depended On It, former FBI international hostage negotiator Chris Voss lays out a simple formula: Ackerman bargaining. Voss learned the formula from an ex-CIA operative named Mike Ackerman and used it for years in high-stakes ransom negotiations with international kidnappers.
As I’ve written before, Never Split the Difference is well worth your time. Voss spends a few pages on Ackerman bargaining and explains a bit of the theory behind it, but today, I’ll just borrow Voss’ language as he lays out the process itself (the first three points are our focus today).
- Set your target price (your goal).
- Set your first offer at 65 percent of your target price.
- Calculate three raises of decreasing increments (to 85, 95, and 100 percent).
- Use lots of empathy and different ways of saying “No” to get the other side to counter before you increase your offer.
- When calculating the final amount, use precise, non round numbers like, say, $37,893 rather than $38,000. It gives the number credibility and weight.
- On your final number, throw in a non monetary item (that they probably don’t want) to show you’re at your limit.
I haven’t personally experimented with steps 4-6, but I’ve had repeated success with the percentages laid out in steps 1-3. Just remember the following percentages: 65, 85, 95, 100.
And as you might have guessed, there’s a flip side, too: when you’re selling something, set your asking price at 135% of what you’d accept, and be willing to negotiate down to 115, 105, and finally 100% of your original amount.
Ackerman bargaining is just one more example of how a tiny bit of the right kind of preparation can pay off in a big way. There aren’t too many tactics out there that will save you money with virtually no work at all. Ackerman bargaining will.