Up Fuel 
Pawn Stars is a show on the History Channel where people come into a pawn store and try to pawn or sell their belongings to one of the pawn broker hosts of the show. It’s a lot of fun to watch because the items that come into the store are always interesting, but what’s even better is the back and forth negotiation that ensues when the pawn broker finds out the item is worth some money. From watching the show it’s easy to see the pawn store owners have the position of power (the potential seller needs money not the pawn brokers right?) now because of this power struggle I’ve picked up on a few things that they do that you should keep in mind whether you’re approaching the deal as a buyer or a seller:
Get The Seller To Name Their Price:
On the show the hosts always ask something like, “What are you looking to get for this thing?” and the owner of the item either names a price or says “Make me an offer.” The pawn brokers always side step the request to make an offer and instead try and launch probing questions to force a price out of the buyer. Once they know the price they’re looking for they can work their way down from there.
This is important for a couple reasons. It gives them a figure to work down from and an opportunity to laugh about how much money they’re asking for something.
My Business Application: Whenever possible regardless of the position you’re in of seller or buyer your goal should be to get a price from the other party first. I find this most important when I’m contacting hobby domain owners (the people that just happened to register a couple domain names and are still using an AOL or Hotmail email account tend to be these people in my experience and the experienced domainers always have a Gmail account or company name email.)
Get The Seller To Drop Their Price:
The hosts of the show will usually say things like, “We still need to make a profit on this item so even though the expert told you it’s worth $5,000 we can only buy it for $2,000.” or they’ll say things like “The item is pretty beat up, if it were in mint condition than I could give you the price you’re asking for but I still need to spend a few hundred dollars to replace the gears and repaint / restore the item.”
Now after they have the price they are able to go through a laundry list of excuses why the price the seller was asking for is out of line. This is all for the reason to instill the idea in the seller that, ‘Maybe he’s right. Perhaps this isn’t as much as I thought it was worth?’
My Business Application: When I negotiate a purchase of a website or domain name I always try to negotiate the price downward by sharing things like the search volume for the site isn’t high enough to justify their price, the income earnings multiple of 3x they’re asking for is too high etc. If someone is coming to you to sell a domain name or website etc. than you have way more power than if you’re going to them as an unsolicited buyer but the lesson is the same – always try to negotiate downward.
Flip The Power In Your Favor:
Bottom Line: Regardless of whether you’re the buyer or the seller you need to find ways to flip the power into your favor. If you’re still paying the first asking price for anything you’re making a big mistake. Regardless of how firm the seller is you can always find some wiggle room even if it isn’t in the funding department. I’ve been able to put together some creative deals for websites I’ve purchased to keep the owner own for extra time etc.
Great points.. the power is always on the receiving side of the transaction, not the asker. These tips can be used to the seller’s advantage too… Once you make an offer, stay firm on the offer, and refuse to go any lower.
Exactly – these tips are useful to keep in mind regardless of which position you are in. The goal is always to find yourself in the best position of power though 😀
Chris I like watching that show too! You can pick up a lot of good negotiation tactics that these guys use. And you’re absolutely right about “This is all for the reason to instill the idea in the seller that, ‘Maybe he’s right. Perhaps this isn’t as much as I thought it was worth?'”
Sometimes they’ll outright even laugh at the price the seller wants. Makes the seller embarrassed and think ‘Okay, so I probably asked for way too much.”
Yah they try to insult people’s intelligence often times as well and it makes them retreat back so far from their previous confidence that they’re willing to accept a lower price. That being said I don’t suggest being a jerk while you’re a buyer / seller just be confident lol.
Being a jerk in a negotiation is rarely a winning strategy. You don’t really want to put the other side on the defensive. You want them to convince them that they will be making the right decision. You want to convince them that your proposal is good for THEM.
Yes, what they do though is come across like a jerk at first when they laugh at the offer and then they quickly list off some objections as to why the price is too high. So it’s not like they are a jerk at all times but they toss in the jerk attitude a couple times just to put doubts in their minds that the price they’re asking for is too high.
Hi Chris,
They teach this negotiation strategy in law school too. Whoever makes the first offer tends to be in a weaker position strategically in the negotiation. You start without any information about how much the other party is willing to offer. The person making the counter offer has the upper hand.
Great insight Richard! That does seem to make sense “Whoever makes the first offer tends to be in a weaker position strategically in the negotiation” thanks for stopping by.