Saturday, 28 December 2019

Never Split The Difference

Never Split The Difference by Chris Voss
Never Split the Difference is the title of a book I read a little while ago. The book by Christopher Voss, a former FBI hostage negotiator. It tells Chris's story but more importantly passes on some good advice in the art of negotiating.

I love many of the ways that Chris explains the psychology of numbers and how to use them to our advantage. I would like to share with you a couple of ways you can use numbers in your life without me spoiling the book for you. So, please do order a copy of the book, but in the meanwhile, please consider these ideas.

Negotiate a Pay Increase 

The first principle I would like to draw your attention to is when it comes to negotiating a pay rise. Many employees don’t have the advantage or possible disadvantage of fixed pay scales via union negotiation. We have to go it alone or accept the pay we are given. Even where pay scales are set, you could negotiate a promotion or grade scale improvement. Employers who like to keep costs low are unlikely to offer you a generous pay rise if they think you will remain working for them on a lower rate.

Chris Voss puts forward this suggestion. Firstly find jobs advertised like yours, take note of the pay rates and also use online tools that help find this information. This will provide you with a range that your role is worth. For example, £23,235 to £31,321. If you are below or anywhere in this range, you can use your research to speak to your employer and use these figures. Of course, you have years of knowledge and experience within your employer's business and, those job adverts are for someone, maybe with expertise in the field but not the employer’s business. Build this last fact into your pay negotiation.

Armed with this knowledge, set up a meeting to discuss your pay. Your employer will know that it will cost a lot of time, uncertainty and money to replace you. It's even better if one of your primary business rivals is paying more as your employer would hate to lose you to them. Point out what you do, and that could include more than your current job description and therefore raising your value. Many employers often take for granted what people do, either because they were asked or they used their own initiative.

Following the discussion, it's more than likely your employer will not wish to appear mean and will offer you pay at the upper level. If your employer needs time to make a decision, then do tie them down to a date and time to discuss that before you leave the meeting. They then know there is a commitment on their part to do this and not hope your request fades away.

Buying and Selling 

We all like a good deal when we are making a purchase or if we are selling something we no longer need. Here's a tip from the book that has worked really well for me. 

When making an offer, use an unusual number. For example, let's say you're buying a used car and the ticket price is £8999. Most dealers will price just below the round figure at this level. After all, it's no longer £9000, it's £8000! We, humans, tend to dismiss the last 3 digits to give us the excuse to spend the money. Once again do your research and see if the car is priced up in the right region for its age, mileage and condition. If it turns out to be at the lower end, don't let that put you off making an offer. 

This article is all about how to offer a figure but do keep in mind when buying be wary about the signals you give off. If your body language and speech are saying that you really want this car, the salesperson is unlikely to budge on price. So, let's get down to numbers. Most will offer the usual round figures. £8250, £8500, £8700 and so forth. I will make an offer after thinking for a while and having a quick scroll on my phone (checking my bank balance) a different number. I will buy it today, right now for £8247. This is such an odd number to the trade it will take them back a little as they try to work out how much discount that is. 

At this point, they might come back with a straight "no" or offer a lower figure. If it's a lower offer, you can check that phone again, grimace a little, think and then having taken a little while, maybe even take a walk come back with another offer. If the answer was no, thank them for their time, provide them with your phone number. Next, say that your off to see a car at a lower price in a couple of hours, so if they change their mind, they can call you. If you're not in a hurry to buy a vehicle, you can always make the offer again to the same dealer on the same car a few weeks later as dealers need to move stock which will depreciate as it stands. 

This principle of unusual amounts works with anything, buying a used car is just an example. 

What about selling. Many of us accumulate things we no longer need. Check out cupboards, the loft and garage where things get forgotten that can be turned into cash. What are they worth? A look on Ebay and Facebook Marketplace will help. Once again you will find things for sale in nice round numbers and usually when you try and sell in those numbers people will offer you less in round numbers too! 

Here's a real-life example. My sister-in-law had a piece of furniture to sell. A corner cupboard storage unit which she had used as a television stand. I asked her what she wanted for it, which was in the region of £30 to £40. I decided it was worth asking for more as it was one of those items that could not be easily compared in price within the second-hand market. I recommended £87, a gentleman responded and turned up with precisely the right amount of money. He mentioned the amount asked was unusual, but there was no discussion on reducing the price. A good result! 

I have sold numerous items in the same way, and by adding those little odd numbers, it does make a difference, even if people ask for a discount it is still within what I would expect to get if I had asked the usual round numbers.

I hope that you have found these tips helpful that I have taken from Chris Voss' book. Please do subscribe to this blog by clicking the button in the right-hand margin and then you will be notified when new posts are published. Also, feel free to leave a comment.   

Sunday, 13 October 2019

Your Finances and The Power of Multiplication

Personal Finance
Photo by Josh Appel on Unsplash

Personal Finance - Budgeting

Many of us have difficulting in managing our finances.

Budgeting, of course, is essential, knowing where our money goes each month and allowing for future expenses is key to avoiding financial problems.

There is one problem that confronts most of us and that it is the subtle power of persuasion either by self or a talented salesperson.

What is the problem?

The problem is minimising the real cost. It's been done in sales for years. For example, if you were considering purchasing an expensive camera, the salesperson will often reduce the seeming cost from the total value to a monthly or daily charge. £2000 over 24 months can be reduced to £83.33 or £2.74 a day. In our minds, £2.74 a day, less than the cost of a coffee is a bargain, even if we don't buy a coffee day! If we did buy a coffee a day, we would at least have the option of cancelling that treat in return for the camera.

Small value items can also create a problem for us. Spending £5 on a magazine or £1 on a chocolate bar might not appear to be much. What happens though, when we add up all those small spends? 12 monthly magazines will become £60, 5 chocolate bars a week will be £260 for the year. This is the power of multiplication. When we are trying to save money, take a look at the real cost, not just the one-time purchase. How many times a week, month and years do you make those purchases?

Be Realistic & Honest

If we are to really manage our money well, we need to be realistic with what we actually need to buy and honest to admit what we don't really need and if necessary can do without. Better still, when we view savings in the light of the power of multiplication, we can turn those £1 a day savings into many hundreds of pounds at the end of a year.

Thank you for reading this post. Please do leave a comment in the section below.