Negotiating a Price

ballooba

There's a few entrepreneurs on this board, some of you may have experience of this, I'm actually quite bad at pricing.

The first time I designed a website I worked out what I would like to earn for what I had done. I then divided this ideal figure by the number of hours I had spent on it and came up with an hourly rate. The first time I quoted this hourly rate to a customer I expected them to laugh, but they didn't and this is now my established hourly rate.

Here is the current situation. I have a intangible asset which another business wants. They initially approached me with an offer of costs (no figure mentioned). I thought this was a bit ridiculous.

The offer they have come back to me with seems to me to be ridiculously low.

What is the etiquette here? Am I expected to make a counter offer or can I Say:
A) Your taking the mick. Make me a real offer.
Outline the reasons why the offer is too low. (Would be pure speculation)
C) Your wasting my time. Conversation over.

Nuttzz

hard to say given the detail you present, but never close the door, the opening bid will always be low, if there is anything like it in the market what would it cost from someone else

EKRIUQ

If your about to embark on a negotiation of any kind its essential that your very clear about where your starting from and where you want to end up. Think about it.

What outcomes would be good for you
What might be acceptable
what would the definitely unaccecptable (The taking the piss offer)
What the other party is likely to wish for/ settle for/ or reject if you get too greedy.

If you've any power sources like a competive edge over your competitors use this to your advantage.
Try this senario

Man1: I'll give you €1000 for your house

Me thinks to me self hes taking the piss I reply to him "I sorry that won't buy my house you'll have to go a bit higher"

Man1 :Thinks to him self he didn't turn me down straight away I'll offer €2000 because I really want this house.

and the negociation begins

Never tell him he's taking the piss always keep him interested by saying that you might sell but you'll need a bit more and eventually what will happen is he'll give his best price or else walk away or else you'll sell.

Alot of this comes down to the skils of the negotiators.

ballooba

What I basically mean is do I have to make a counter offer or can I just decline their offer?

Should I indicate that their next offer should be a multiple of the first offer or is that cheeky?

EKRIUQ

No you don't have to make a counter offer let them make the next move you have something they want and if there still interested they'll come back.

Say somthing like this "no thanks I'm not really interested,(Pause) well at that price anyway.

and leave them come back with a new price, your the person in control.

Imposter

Thank them for their offer and state your usual rates. Don't even try and negotiate, yet. State some reasons why you might deserve this amount but don't go overboard trying to sell yourself. If they come back with a more realistic offer but lower than your normal rate then try negotiating.

Don't insult them by asking if they are taking the piss.

ballooba

I was only joking about telling they were taking the mick. Well, about phrasing it that way anyway.

It's not a contract for a project. It's an actual asset they want.

Negotitations are by email by the way. If we reach an agreement I will look into how to formalise the agreement. i.e. What form the agreement has to take for it to form a solid legally binding contract. That's neither here nor there anyway.

Bluehair

ballooba wrote:

What I basically mean is do I have to make a counter offer or can I just decline their offer?

Should I indicate that their next offer should be a multiple of the first offer or is that cheeky?

Depends on what you have in mind for a reasonable sale price. I'd be inclined to tell them that while you're not opposed to selling the asset the price they have currently offered is "completely unrealistic".

magpie

Depends what the asset is, doesn't it? Let's say its a domain name or something, you need to shop around and see if there's anything there you can compare it with.

Work out how much you'd like for it, then realistically the lowest amount you're willing to take, pick the number in the middle and suggest it to the purchasers.

ballooba

Is 'unrealistic' even too harse a word to use or is it ok?

Nuttzz

tbh it boils down to how much do they want it & how much are you willing to let it go for. unrealistic isnt neceaasry a bad word

ballooba

We'll see what happens. I knew from the start that the asset may be worth more to my business than theirs.

My business is established and I might not need the money as much as they do.