Two Types of Proposals. Which One is More Persuasive?

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By Steve Martin, CMCT

Imagine that you are preparing a proposal for a client and, having researched all the information, equipment, materials and resources that you will need to deliver the job, the time has come to commit to paper the only piece of information your client is really interested in. Your price.

Will your client be more likely to accept your offer (or at least be more conciliatory with their counter-offer) if it has a precise ending, or would you be more effective doing what many of us do and rounding up your quote?
It turns out that persuasion science can provide a clear answer to this question not only making your future negotiations more successful but maybe your next salary review too.

Researchers Malia Mason and her colleagues Alice Lee, Elizabeth Riley and Daniel Ames, believed that people could improve the result of their negotiations by ensuring that the first offer made is a precise rather than a round ended one. In one study participants were asked to read an account of a negotiation concerning the sale of a used car. In each case the participants assumed the role of a seller and received one of three offers. One offer was a round-ended offer of $2000 but the other two had precise-endings; either $1865 or $2135. After each participant received their opening offer they were then asked to respond with a counteroffer of their own. Those sellers given an initial offer that ended in a precise number were much more conciliatory with their counteroffers typically countering 10% – 15% away from the opening offer. However those offered $2000 on average countered with an offer representing a 23% difference.

These results seems to show how the small act of providing a precise rather than a rounded opening offer can be a potent strategy potentially reducing the gap between the two parties as the negotiation progresses.
Why?

iStock_000015372171MediumThe researchers believe that recipients of precise offers are much more likely to think that that the person who makes a precise offer has invested time and effort preparing and therefore has good reasons to support the offer they are making. This was consistent with a test conducted after the negotiations where participants’ perceptions were measured. They were much more likely to agree with statements such as “The young man put considerable energy into researching the value of the car.” and “He must have had good reasons for the price he suggested.”

It is also interesting to note that this study found that a precise opening offer was more effective even when it was less than the $2000 round-ended opening offer. This insight leads to an intriguing thought. When the time comes for you to sell that rusting Honda Civic on your driveway you could end up financially better off by opening with a reduced, but more precise offer of say $3827, than a larger less precise one of $4000. Of course should you be in the market for such a car you might be advised to pay special attention to the seller whose opening demand is unusually specific.

This precise number strategy doesn’t just work for one-off transactional negotiations like second-hand cars. The researchers found similar results across a range of other contexts. For example, negotiation experiments conducted with experienced managers who made opening offers in the form of a precise number received counteroffers that were on average 24% closer to their opening offer than those who started with a round number offer. In every case this anchoring to the initial offer carried through to the final settlement.

So when it comes to putting pen to paper and writing down that all important number on your proposal be sure to avoid the temptation to round up your price. Similarly when it comes to salary review time, be sure to write down a specific, precise number and make that your opener.iStock_000021382392Medium

Beyond your negotiations maybe using more precise numbers could help when it comes to managing projects and persuading people to complete tasks by a certain time and date. Rather than asking people to get back to you by the end of the week you might be more effective signaling a precise time e.g. “Please get back to me by 3.45pm on Thursday.”

It goes without saying that the INSIDE INFLUENCE team would love to hear your comments about how you could put this precise number strategy to good use. Be sure to submit them by 2.56pm next Wednesday. And in no more than 293 words please!

Source:
Mason, M. F., Lee, A. J., Wiley, E. a., & Ames, D. R. (2013). Precise offers are potent anchors: Conciliatory counteroffers and attributions of knowledge in negotiations. Journal of Experimental Social Psychology, 49(4), 759–763. doi:10.1016/j.jesp.2013.02.012

  • Francisco Cáceres

    Magnifique¡¡

  • Doug Kenrick

    Very interesting!

  • Tom

    I have found this works on EBay “Best Offer” listings. No ridiculous lowball offers, but a solid lower and memorable amount can be effective.

  • Becki Saltzman

    Excellent (and not entirely surprising). Price driven online searches, however, tend to start and end with round numbers.
    Real estate is an interesting animal because people search privately online in large price ranges. My non-empirical and extensively experiential studies indicate that they search round numbers. Therefore, although many real estate pros input a property listing at $499,000 vs. $500,000, that very act would eliminate the search for someone searching from $500,000-750,000, for example.
    Studies that reveal pen and paper behavior may sometimes be skewed by online behavior.

  • http://JamesTPereira.com/ James T Pereira

    This works even with smaller amounts. Many online products end with 7, so you can buy ebooks for $47 or $97, etc.

    I used this technique successfully in Big Pharma where we priced products with odd numbers rather than even.

  • Mark S. Fitzgerald

    Next time you watch the “Price is Right” you will see why the show producers list many of the prizes, including cars, at prices that are not rounded up or down but rather precise.

  • Randy Zeitman

    In my independent research I’ve found the opposite is also true … it’s better to round up when you’re requiring someone to give you something. It’s easier (less cognitive load and investment of time) to ask for $20 or say “I’ll be there in 10 minutes.” than to say “Can you give me $19.95 or “I only need 8 minutes and 24 seconds of your time.”

    “Rather than asking people to get back to you by the end of the week you might be more effective signaling a precise time e.g. “Please get back to me by 3.45pm on Thursday.””

    (Right, but imagine if you said 3:47 pm… quarter hours are rounded.)

  • Der_Goldberg

    Works even well for beggars. “Do you have a euro for me please?” sounds like the average beggar in Frankfurt (Germany). But: “Do you have 1,65 euros for me please?” expresses the need of a something special, i. e. a train ticket within city limits.

  • http://www.durhamwebdesigner.com Larry James

    I have always rounded down my web design quotes. I am afraid that I am going to swing too high and strike out. I will try your strategy on my next proposal.

  • tivon

    my english is poor.but i really like the article

  • Ail Nemat

    Cool, Excellent, Perfecto, imaginatooo, thanks for this awesome article, now I wonder why mattresses are on sale through out the year with number that are not rounded up. Thanks once again Mr. Steve for another excellent article, the pictures you added in this article made it more thought provoking.

    Keep Up the good work. Have a great week.

    Sincerely,
    Adil Nemat

  • http://adventuresinhealth.co.uk/ George Harris

    How very interesting, and, refreshingly, research that also makes logical sense and goes in line with experience. Thanks for the write-up.

    Cheers
    @georgehealthadv

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