Negotiation means to come to an agreement between two parties, and it includes many strategies to conclude to the best outcome possible. One such strategy is termed as Low-Ball. It involves offering an unreasonably high or a low price solely with the intention of disturbing the other party. This method can be applied to get the other party to shift their stance, in return benefiting you. This article is about how the High Ball/Low Ball strategy works and how to negotiate with it.

What is High-Ball/Low Ball Negotiation?

High Ball and Lower Ball are terms that denote a style of negotiating where one price is given with the intention of setting it unrealistically high or low. The opposing party is unaware that the price is just a starting point. The lone marker doesn’t necessarily have to be toward the climbing side for aggressive bids, but there must be some leniency for bargaining and reach a happy settlement. Both strategies attempt to set expectations of the opponent which results in better terms for the party making the benchmarks.

High-Ball Negotiation:

As should be obvious from the name itself, this negotiating strategy involves beating one’s estimate with an unbelievable price and placing the first offer. When a high-ball negotiation is executed, the offer one places is substantially higher than what they are expecting. If executed correctly, this strategy will result in a tipping point to aid in persuading the other side to reconsider their price.

Example A labor union targets a 45% increase in pay while the average increase at the market is 4%. The company is then likely to suggest a realistic amount and negotiate a final figure of approximately 6%.Through the negotiation, the high initial challenging demand causes them to low their offer. At the end this meets an agreement that benefits the union.

Low-Ball Negotiation:

The Low Ball strategy aims at achieving a target figure by presenting an offer significantly less than what you are ready to pay. Rather than capping what you are willing to offer yourself, this technique makes the other party state their preferred cost, which less frequently meets the requirements of those consigned to this method and more benefitting you.

Example A potential buyer offers Rs.43 lakh. The seller bounces back at Rs.37-38 lakh. From a low starting point, a middle ground is created that rewards the buyer without an extensive financial burden.

How to Negotiate a High Offer Price

Staying calm and patient is the best approach if you receive a high stand offer that you do not like. Some ways to deal with high-ball offers are listed below:

• Prepare well – It is always useful to know what the market looks like before entering a negotiation. Try to find out the prices of products and services similar to the ones you are negotiating over. You’ll know an outlandish offer when you see one if you spend some time preparing.
• Don’t rush to counteroffer – People tend to make a quick counteroffer after getting a high stand offer. Instead, they should do some background research, and induce the high offer maker to give a fair price. This technique will make the other party reevaluate their offer.
• Share Industry Data – Make sure to back up your claim by offering some market data or statistics that justify your perspective. It will make it harder for the opposite side to misrepresent you or for them to expect you to accept unreasonable terms.
• Walk Away Technique – This technique comes in handy when you feel that the offer is straight up unacceptable. Gently tell them that those terms are not going to work for you. That can lead to getting a more acceptable proposal from the other party.

How to respond to a low-ball offer

For your consideration, here’s some advice on how to negotiate a better price should you find yourself on the receiving end of a lowball offer:

Maintain Reasonable Emotions:

As much as possible try not to act if the offer is wildly unreasonable as this can lead to anger or frustration. Assess the situation so you can devise a thoughtful strategy.

Provide an Acceptable Counter Response:

If they make an offer that is below what you consider fair, counter them with the lowest amount that you are prepared to accept based on what your research shows.

Generic Thinking Should be Avoided:

Try not to think that the amount offered is the only amount a buyer would be ready to part with. Bring them to engage in further discussions so the other person can present their side.

Needing A Pivot Price:

If the counteroffer does not work then use the offer for negotiation to set a price reference. From this, they can make an estimation as to what measures should be taken for a more realistic price.

How to implement the high-ball and low-ball methods

To buyers:

As a buyer, you can make two bids. Start with the low-ball approach and over a tip below what you are willing to pay. This way, you are creating a situation where sellers can set a proper price for their goods. It is all about taking advantage of the situation, so sellers are tipped over and you gain out of the price dump.

To sellers:

You should shift to the high-ball method as a seller. Set the price higher instead so that you can quote a price higher than what you are willing to sell your product for. This way, you set a higher pace which creates room for you to bring the selling price in between where you are to be content.

Powerful Action Plan for Winning Negotiations

Do Not Make Best Guess:

Do not make guesses about what the other person would want. Dig a little deeper and get to know the unique property that lies in the price before discussing how you propose a tipping point.

Stay Composed:

Use calmness and logic when responding to or when employing the high ball low ball techniques. With high emotions, you can easily get momentarily blinded and your judgment would be altered drastically.

Dispel Tactics Used Against You :

Your opponent’s tactics should not disrupt the course you have set. Make sure you remain focused on what the goals of the negotiation are and implement your methods to steer the conversation towards a just conclusion.

The Important Lessons from Applying Low Offer and High-Offer Negotiation Strategies

When Attempting To Purchase:

Use low-balling tactics in a bid to reduce the price. This does not give you a solid figure to negotiate with.

When Attempting To Purchase:

Use high-balling tactics to set a price that is higher than what you expect to pay. This will give you more leeway with manipulating the figure in order to achieve your goal.

Always be prepared:

Examine the market and know what prices it commands so that you will always have a good retort to low or high-balling figures.

Remain Composed:

Regardless of whether you are responding to high-balling or low-balling, be as strategic as you can irrespective of the situation and seek to get maximum advantage.

You have the power to control proceedings in the negotiation process through high or low offer techniques. Whether you are selling or buying, these methods can help achieve the most favorable results.