I saved $400 using human engineering…here’s how.
The $400 Coke: How gift giving wins negotiations
Summary: I strategically gave a seller on Craigslist a can of Coke-Cola before negotiating on price…and he gave me a $400 discount.
Involved in a heated negotiation?
Try giving a gift to the person on the other end of the negotiation.
This article explains EXACTLY how it went down and why it worked.
The psychology behind gifts
When people receive things from others, they naturally feel indebted. Humans have been like this since the beginning of time. At this point, it’s ingrained in us.
As psychologist Robert Ciadini (the author of Influence) puts it:
The rule of reciprocity says that we should try to repay what another person has provided us. By virtue of the rule, we are obligated to the future repayment of favors, gifts, invitations, and the like.
The impressive aspect of the rule for reciprocation and the sense of obligation that goes with it is its pervasiveness in human culture. It is so widespread that after intensive study, sociologists such as Alvin Gouldner can report that there is no human society that does not subscribe to the rule
Someone does something for you, our human nature makes you feel like you MUST repay them.
Get the point? Not only does helping each other out feel good, but the giver can win too.
Using the Reciprocity Rule to your advantage
You’re a busy person so I’ll just cut to the chase: If you want something from someone, do them a favor or give them a gift first…even if they don’t ask for it.
Yes! When you give someone a gift, even if it’s completely unexpected and wasn’t asked for, the Reciprocity Rule kicks into gear and the receiver of the gift automatically feels indebted to you.
Here’s a few examples of the Reciprocity Rule in action:
- Waived speaking fee: I landed Andrew Warner, a popular internet personality, to speak at my conference for free by first giving him a bottle of scotch and a handwritten letter as a gift and then asking if he’d speak.
- Increased tips: Waiters who give a piece of candy with the bill get 3.3% larger tips. Waiters who give two pieces of candy get 14.1% larger tips. Waiters who delayed the action of giving the second piece of candy, for emphasis, raised tips by 23%. (source)
- Increased donations: The Hare Krishna Society, a Hindu religious movement, runs its entire organization around the Reciprocity Rule. To solicit donations the group gives free flowers (cost=5 cents) to passerby’s on the street. When the receiver says thank you, the giver responds with “And we accept donations so we can continue good works.” The interaction usually ends with receiver dishing out a buck or two.
Now, before I go any further let me just say this: gift giving is GOOD…regardless if you get something from it or not. Don’t use this powerful tool to become an evil genius. It’s OK to use this post as a way to help win when negotiating, but do nice things for others because it’s the right thing to do.
Not does the Reciprocity Rule on uninvited gifts, but it can bring unequal results. A very small favor can produce a sense of obligation from the receiver that makes them repay you tenfold. The reason behind this is the feeling of indebtedness. Owing someone else makes us feel guilty…and people HATE that feeling.
This means performing very small favors for others can help you big time when asking for something afterwards.
How a $1.99 Coke saved me $400
- Do I lowball them via email beforehand or should I show up first then negotiate?
- Will they accept a lower price even if the ad says they’re firm?
- How low can I go without insulting them?
If you’re like me and you buy things off Craigslist on a regular basis then you’re CONSTANTLY asking yourself these questions.
The negotiating part of the deal is always the hardest and most uncomfortable.
I’ve bought hundreds of things off Craigslist…and negotiating is always a little weird.
But the other day when I went to buy a motorcycle I came armed with a secret weapon: a bottle of Coke.
“Since you brought me something to drink, I guess I can do $1,800”
After reading about the famous Coke experiment in Influence I decided to put into action.
Before meeting the seller of a Honda motorcycle I found on Craigslist, I made a little pit stop at Walgreens and picked up two Cokes: one regular and one diet.
The motorcycle was listed at $2,200…a fair price but not exactly a steal. Two days before I had just sold another motorcycle at $1,800, so I showed up with only $1,800.
For the sake of transparency, before I arrived I sent the seller this email. He called me immediately to set up a viewing.
When I arrived here’s how the conversation went down:Me: What’s happening. I’m Sam. So this is the bike? Looks nice! Seller: Sure is. (said with a mean ol’ ‘I know you’re here to low ball me’ face) Me: And sorry I’m a few minutes late. I stopped at the store to get something to drink. Do you like diet or regular? They had a sale so I thought I’d pick one up for you as well. Seller: Regular is fine. Thanks. (30 minutes go by as I test drive the bike, make sure there isn’t damage and check out the title) Me: I really like the bike. What type of wiggle room can you do on the price. I have a budget of $1,600. Seller: That’s too low. I have other interested buyers who will do $2,200. Me: How about $1,800? (I show him the cash) I’ve got cash here now and most people on Craigslist flake anyway. Seller: Well, since you brought me something to drink, I guess I can do $1,800.
We both got a fair deal: I got a bike and the seller got some cash.
Now, I know what you’re saying:
“You can’t possibly say the Coke alone is the reason why he sold it to you for $400 off.”
And to that I say “does it really matter?”
When it comes to saving money and getting what you want, the end result is what matters…and I’m willing to give a $1.99 gift even if it only increases the chances by 30%.
You see, buying a motorcycle off Craigslist (or any other type of sales) is different from giving a random passerbyer a gift.
A random passerbyer isn’t expecting you to screw him, but that’s EXACTLY what a seller is expecting.
Sellers are ready to go to war. They anticipate lowballers, tire-kickers, and flakes…so when a prospective buyer does something nice for you, even if it’s as small as smile and give you a Coke, you’re completely caught off guard with the kindness.
And so the Reciprocity Rule works wonders.