This is an interesting story that I witnessed while on vacation with my wife in the Caribbean’s. The manager of the luxury boutique hotel in Grand Bahama Island said to Lillian a young tourist lady: “the room will cost you 2400 dollars for the whole week to include full board and all beach activities”. Lillian smiled at him and said: “this is a little more than what we have budgeted for. Is there any way you can reduce it a little bit”? The hotel manager said, I know you are a regular customer so I suppose I can reduce it to 2000. The lady came again and said: “well this is not a bad rate but what if I can book much more rooms over the entire season, how much cheaper would that be”? Well he said, if you book several rooms that will come down to 1800 per room. Harry, said Lillian I am prepared to book 3 rooms over this season, for that you should be able to give me a little bit more discount! I suppose he said, I can reduce it to 1600. She immediately interrupted him and said how about 1200? Ok then, he said, you got a deal!
Could you spot the 3 main things Harry did wrong?
- First, when making the discount he gave round numbers which made all the numbers sound randomized, thus, reducing his credibility.
- Second, he moved in big steps rather than small steps. He gave too much away each time; such as going down from 2400 to only 2000 which is a big loss of money, while giving the impression that he still can give more.
- Third, he didn’t trade, he just conceded which is weak and makes it easy for Lilly to push him down further and further.
So next time Harry do it right! Odd numbers, small steps and trading.