Store closure sale — all things need to go! A take on seller’s willingness to sell.

Prologue:

Source: pixabay.com

A few days ago I was talking with a friend and she mentioned how happy she was to go shopping to a physical store after such a long time and to celebrate the occasion decided to visit a well known upscale mall here in the Seattle area. The story she said was something I have never heard happen here in the US, because I have never thought to try this. She bargained with the sales guy at the store! She was at a well known kitchen supply store and saw a few cast iron cookware at a 40% discount, she went upto the guy and asked if this was the best discount he could offer and bargained an additional 20% discount on that piece. Before I move on I want to say how much I am in awe of my friend!

Topic Introduction:

We all know that there is a significant mark up of the price in retail store fronts and goes through multiple markups starting from the manufacturer -> distributor -> store front, now the mark up also depends on where the store is (mall vs outlet vs one-off store etc.). But have we stopped to consider that every storefront has a cap on their willingness to sell ?

Willingness to sell is nothing but the minimum to which the seller will go to make that sale, all costs and other factors considered like fixed cost, variable costs. I will cover the costing structure in a future article but know that fixed cost is something that is fixed no matter how many units you produce or not, example: equipment maintenance and variable cost is something that will change based on how many units of that you use, example: wages to your per hour employees, depends on how many employees you hire.

The seller generally tends to stick to the fixed cost as the rock bottom willingness to sell below which they are digging into their pockets.

Figuring out a customer’s Willingness to pay (WTP) is more of an art than a science and I have covered that Here. But what I want to touch upon here is that there is room to negotiate the price that the seller calls out as their selling price and I am here today to discuss that.

The Conceptual Framework:

Let’s start with how you can figure out a seller’s willingness to sell. There are obviously a few obvious indicators — liquidation sale, store closing sale etc. but there are a few more which aren’t that obvious but come in handy to know and understand how much of a discount you are able to get from your sellers. I will start by laying out a few well worn negotiation tactics that have been used by many people over the years and how a few of these will also tell you the seller’s WTS number.

Negotiation Tactics and other other side of the coin:

1. Be Prepared — knowing the product, the market and the competitors in that market really helps and should be the cornerstone of your negotiation tactic. For example: if you are in the market for a new car, you first of all need to know which make, model and year you are willing to purchase and of course your purchase limit. Let’s assume you have test drive the cars and know exactly which one you want now start by talking to all the players in the market who meet your needs and once you have the numbers pick 2 or 3 players that are close to your range and also close from each other and start negotiating and quoting what the other players are willing to offer. This will give you an upper hand and let you walk out with better deals and maybe even more services and accessories for your new car.
2. Understand the dynamics and the key players for deal making — not everyone in the negotiation party has the power to make the decision to lower the price or even start a negotiation, so it always helps when you know who you are talking to and if that person has the power to meet your demands, if not it’s okay to ask that you speak with someone who can make that decision.
3. Be prepared to walk away — product is not yours until you have made that final purchase so do not get emotionally attached until you have made the deal — easier said than done I get it but trust me you will lead a life with lesser regrets this way. Also if you think you are fixated on a deal even though there are clear signs that there are better deals out there then it’s probably time to ask the fundamental question of why this deal? Why not the other one which seems obviously better.
4. Keep the negotiations professional — All of us have experiences where at some point we absolutely did not like the way someone spoke to us, treated us etc. so please treat the other person as you’d like to be treated and keep the negotiation and the conversation as professional as you need to be.

The Nexus Beyond:

Note every seller wants to sell the product/service and that’s why they have built/procured a product and are in the marketplace looking for a buyer and so there is always willingness to sell but you as a buyer should also know what is your willingness to pay and see how far away from reality are both of the parties. WTS is driven by multiple emotional,financial and other factors and the same goes for you as a buyer too so make sure you do not have any regrets after you purchase the product and enjoy the fruits of your labor.