Jun 09, 2021

Ackerman bargaining

Much of the negotiation tactics that I’ve written about from the book Never Split the Difference by Chris Voss is a form of psychological judo to avoid haggling and letting your counterpart bid against themselves. However, from time to time, you’re going to be forced into bargaining with a hard-ass haggler. In those situations, you should use the Ackerman model. It is a systematized process to bargaining with four steps:

Set your target price or goal and calculate 3 other numbers: 65, 85, and 95 percent of your target. Your first offer will be 65 percent of your target.
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, oddly specific numbers like, say, $37,893 instead of $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.

The genius of this system is that it incorporates many of the psychological biases discussed previously such as reciprocity, extreme anchors, loss aversion, etc. without needing to think about using them.

First, the original offer of 65 percent of your target is an extreme anchor that will slap your counterpart in the face and bring them right to their price limit. An inexperienced negotiator may immediately give you their best offer but most experienced ones will have expected the anchor.

Then, your offer is going to get progressively better which will inspire reciprocity from the person you’re negotiating with. Also, notice how the increase in each progressive offer is diminishing. This convinces your counterpart that they are squeezing you to the point of breaking so that by the time you reach your target, they will truly feel they got as much as they could out of you.

Finally, the oddly specific target number that you have in mind will convince your counterpart it really is your best offer.