PhotoWhen David Loschelder was a graduate student in Germany, he needed to rent a bicycle for a month and thus, had to negotiate with the bicycle's owner.

He was surprised when the owner said the cost of the four weeks would be a very precise number of euros – 34.50. Not 30, and not 35.

"As a consequence of this precision, I felt my counterpart was overly competent and I didn't even negotiate for a single cent," Loschelder said.

After that, Loschelder said he became interested in the effects of very precise prices when it came to negotiations. Was it always effective to be precise, as the bicycle owner was? That was the beginning of a research project to find out.

Doesn't always work

"Our research shows that more precise opening prices can yield you a significant negotiation advantage, but you have to know whom you're negotiating with," Loschelder said. "With amateurs, this number should be very precise; with experts, however, negotiators should either choose a moderate level of precision or back up their highly precise number with a compelling reason."

In other words, making an extremely precise offer for a car or a house may hurt your chances of success if you're negotiating with a pro – a car dealer or a real estate agent.

But Loschelder says his research shows that a precise offer – for example, $9,572.36 or $384,961.42 - are more effective with novice negotiators. These people, he says, are more likely to view a very precise bid as a sign of competence.

Seeing through the tactic

Experts, he says, tend to see through this tactic. However, Loschelder says he found experts are more likely to be persuaded by what he called a “moderately precise bid – $9,500 for example.

"Interestingly, amateurs seem to think: 'Oh, this number is so precise, my opponent must have thought quite a bit about a fair price. He or she must be really competent,'" Loschelder said. "In contrast, experts perceive this as too-precise a price and denigrate their opponent's competence."

You also have to understand what's negotiable. The supermarket check out clerk isn't going to negotiate the price of a dozen eggs. But a car dealer and real estate broker will definitely deal on the price of a car or home. When dealing with these professionals, Loschelder suggests being only moderately precise.

However, when buying something at a yard sale or on eBay, being extremely precise just might work in your favor.


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