4 Sales Negotiation Traps—and How to Overcome Them

In sales negotiation, both sellers and buyers often fall victim to common decision-making errors. By being more mindful of these traps, we can learn to avoid them—and get better deals.

By on / Business Negotiations

sales negotiation

Whether you’re planning to put your home up for sale, trying to unload excess merchandise, or searching for new clients, there’s a good chance you’ll make your next sales negotiation more challenging than it needs to be by falling into common cognitive traps. You can improve your sales negotiation skills by learning about four traps that often hold back sellers and how to avoid them.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.


Sales Negotiation Pitfall #1: Overvaluing Your Possessions

Why is it that some homes are plucked off the real estate listings within days or weeks, while others sit for months, even years? Location and curb appeal have something to do with it, but there’s another factor, one that sellers can avoid: the tendency to overvalue one’s property. Some sellers ignore the sales negotiation techniques suggested by their real estate agents’ carefully determined valuations and ask for much more than they should.

The endowment effect leads us to overvalue just about anything we own, no matter how trivial. One famous study led by Nobel laureate Daniel Kahneman found that students given nondescript coffee mugs set higher selling prices for the mugs than students playing the role of buyer were willing to pay. The endowment effect can lead sellers to have difficulty selling an item.

To avoid overvaluing your possessions, seek out unbiased appraisals from third-party experts such as real estate agents, jewelry appraisers, or financial experts. Imagine how you will feel in several months or a year if your item fails to sell. By focusing on the future, you may be able to look at your possession more rationally.

Sales Negotiation Pitfall #2: Focusing Too Much on Price

What’s your most important goal when making a sale? If you’re like most of us, getting the best price possible is foremost on your mind.

It’s normal for sellers (and buyers, too) to place a high premium on meeting their target price in a negotiation. But a self-interested focus on price haggling prevents us from viewing sales negotiations as collaborative. When stuck in a competitive mindset, you’re unlikely to probe your counterpart’s needs or add more issues to the discussion, such as delivery timing, payment schedules, and other sources of synergy that could enhance the agreement and your bottom line.

When you find yourself obsessing about price, brainstorm ideas for adding more value to the deal, both on your own and with your negotiating counterpart. 

Sales Negotiation Pitfall #3: Compromising Your Ethics

Whether you’re selling a used car, your professional services, or one of your company’s products, you’ll probably know more about the item up for sale than potential buyers do. Because of this information asymmetry, you need to be careful not to take advantage of buyers during your negotiations. Even negotiators who consider themselves to be highly ethical are at risk of compromising their moral principles, research shows.

In a sales negotiation, examine whether your negotiating behavior is in line with your ethical standards. If a buyer is skeptical of your claims, you might propose adding a contingency agreement to your contract. For example, a building contractor might promise to pay a penalty or accept a lower payment if he can’t meet construction deadlines.

Sales Negotiation Pitfall #4: Making Unappealing Offers

Even if you’ve spent a good deal of time researching a potential buyer’s needs and putting together proposals that meet her interests, you could slip up by failing to present your offers in the best possible light.

Consider that sellers often fail to frame information to their advantage. In a typical purchasing negotiation, the buyer has a target price she is aiming to meet, and she’ll view any compromise away from her target as a loss. Sellers often unwittingly reinforce such negative frames when they present proposals in terms of losses away from the buyer’s ideal price.

Instead, try to frame your offers as gains over the status quo. Take the case of an office-supply salesperson who is wooing a potential customer. Rather than saying, “I can tell you were hoping to get the price down to $100,000, but that’s impossible,” the salesperson might say, “I have a good idea of what you’re paying now for your supplies. We can shave $20,000 off that amount— significant savings, I think you’d agree.”

Awareness of these common sales negotiation pitfalls is the first step in overcoming them. It takes diligence, but we can all lessen the negative impact of common cognitive biases on our mind.

What other sales negotiation strategies do you recommend? Share them with our readers in the comments.


Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.


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