What Is The Low-Ball Technique And Does It Work?
Often used to make the price of something seem less significant than its rewards, the low-ball technique is a staple of sales and business in general. It's likely been around for nearly as long as humans have, but more recent techniques related to low-balling stem from research conducted in the past century. Understanding how and why low-balling works can help you implement it into your own life or spot it for what it is.
What is the low-ball technique?
The low-ball technique is a persuasive tactic frequently used, directly or indirectly, in selling various products. Traditionally, the salesperson offers the buyer an item at a below-market or average-market price. The buyer may agree to make a purchase or come close to committing to a sale. However, the seller will then increase the price without warning.
The low-ball technique may appear to be a "low tactic," but when done artfully, it has been known to work in some markets.
However, companies can also use the low-ball technique in more subtle ways. It may be utilized to get customers interested in a deal and then motivate them to simply accept that every good deal has a few tacked-on fees. For example, a service provider may quote their services at $49.95 a month but then tack on service charges and miscellaneous fees. The buyer sees that the final price has increased but has tolerated it because the price differential was not great, and there was also a logical reason for the price increase.
A history of low-balling in sales
While it's safe to assume that some version of the low-ball technique has been around for centuries, it was first officially demonstrated by Robert Cialdini in 1978.
The psychology behind the low-ball quote is that of cognitive dissonance. If a person already wants to buy the product and is anticipating the future benefits of doing so, they probably won't be motivated to back out of the deal, even if they aren't thrilled about the price.
This is the principle of cognitive dissonance at work, which refers to the mental discomfort of a person who struggles to understand two opposing and disharmonious elements. In an attempt to reckon with seemingly contradictory info, our minds tend to seek out an escape – be it an explanation, justification, etc. – to avoid the confusion. Therefore, in sales, giving the customer a reason to avoid that cognitive dissonance may prompt them to commit to a sale. This is an especially effective technique if the seller downplays the extra costs and highlights the benefits of the product.
Cialdini's work demonstrated that groups often respond to the low-balling technique if they want to avoid the cognitive dissonance that comes from backing out of a commitment they made. During his research, Cialdini asked students if they would like to participate in an experiment at seven A.M. Most subjects refused. However, in a subsequent study, another group was told of the experiment study without learning the time. When they did learn of the time later and were given the option to drop out, almost all the subjects came anyway –a 95% attendance rate!
It's not just the advantage of receiving the product's benefits that motivates a client to buy, even in inconvenient circumstances. In many cases, the desire to decrease cognitive dissonance can result from simply not wanting to go back on a deal the buyer already made. The customer likely doesn't want to break a commitment and will find it hard to say no after giving a resounding yes to the seller and themselves.
How to make the low-ball technique work
If you're having difficulty understanding the technique or getting it to work on your customers, consider the following steps:
- Make sure to make an attractive initial price and pitch for the product. You must be confident the buyer will go for this price.
- Get a commitment from the customer, verbally AND publicly, in some way, such as a down payment or a contract.
- Change the agreement (always within the confines of the law) and then point out the deal's benefits and the necessity of the price increase (as in, it's mostly out of your hands, or you don't make much money from the deal anyway). Downplay the additional costs as something small the customer can afford with ease.
- Eliminate pressure or negative feelings. Always let them know it's their decision entirely.
Observing the low-ball technique in other walks of life
Even in interactions with family and friends, persuasive tactics are sometimes used; think of a child asking his parents for a new toy to avoid a tantrum at the store, a student wanting a better grade from his teacher, or any "favor" that suggests influencing an outcome later on.
Universally, low-balling typically has a negative connotation since the seller or manipulative party seeks to guide the subject to a specific decision, not necessarily an open-ended one based on what the subject wants.
Some have even wondered whether low-balling techniques are abusive forms of persuasion since they are often used to take advantage of a person who is not experienced in dealing with sales or a certain industry, like cars or real estate. Manipulating a person without that conscious recognition (as in, the person knows what's happening and accepts it) could be considered unethical. However, it is rarely declared illegal.
The only exception might be in specific legal situations, such as lawyers that try to lowball jurors to get a favorable verdict. Typically, a judge will challenge and strike any comments from the record that suggest the lawyer is flattering the jury or trying to establish his authority over the jury.
While using techniques like the low-ball strategy may be primarily reserved for business transactions, it is common for people to be manipulated into making impulsive decisions. Companies rely on these so-called predatory strategies to make income at the expense of the consumer. This can lead to a multitude of problems in a person's family life, especially if it involves falling into debt, taking part in risky behaviors, or experiencing anxiety and depression.
No matter how the low-ball technique comes into your life, understanding how to make decisions in a way that makes sense for you can be a valuable skill. Resources like online therapy can give you a space to discuss your goals, your experiences, and your own psychology. Because you can connect with providers around the world from the comfort of your own home, finding someone who can help you achieve what you're after has never been easier.
Being on the giving or receiving end of behavior involving the low-ball technique can be stressful, but online therapy can help. One study analyzing the impact of online therapy noted that it can reduce symptoms of mental health disorders like anxiety, depression, PTSD, and more. Even if you aren't managing a mental illness, getting insight and support from an outside source can boost your confidence and give you the tools you may need to thrive.
Takeaway
What is considered lowballing?
Depending on the scenario, market prices, and individuals involved, a lowball estimate is typically considered to be between 15% and 25% (or more) below the asking price of a good or service.
What is an example of lowballing?
The lowball procedure is a common tactic used to gain consent from buyers or sellers of high-ticket items like vehicles or homes. For example, a realtor may list a home for $225,000, but after the buyers agree to sign the paperwork, they change the asking price to $250,000.
Or vice-versa, the buyers may offer $225,000 on a home with an asking price of $250,000, then raise the offer or walk away if the seller doesn't accept.
What is a lowball in psychology?
Within social psychology, lowballing works in producing amenability because of the theory of cognitive dissonance— the idea that when an individual compares things that aren't psychologically consistent with one another, they will attempt to reconcile them and make them more consistent in various ways.
To utilize the above example, the buyers won't likely back out of the deal even though the price was increased when the realtor points out that the home fits their needs and has the amenities they're shopping for. For the buyers, the "pros" (convenience and amenities) justify the "cons" (the price hike).
Is it OK to lowball?
It's OK to lowball as long as you're willing to accept the possibility it won't work out. Continuing with the real-estate example— if a realtor lowballs a potential buyer, they must be prepared to lose the sale if the buyer decides to walk away when the price is raised. Conversely, if a buyer lowballs the seller, they must be prepared to lose the home if the seller receives a better offer or rejects it outright because it's too low.
Why do people lowball?
Simply put, people lowball with the intention of making more or spending less money on something. When a realtor lowballs a potential buyer before raising their price, they're probably looking for a way to make more profit (commission) on the sale. When a potential buyer lowballs an offer, they're likely motivated by the desire to spend as little as possible on the home.
How do you respond to a lowball?
The best way to respond to a lowball offer will depend on one's unique circumstances. For example, one's response to a lowball salary offer for a new job will likely be very different from a potential buyer's response to a lowball offer on their home.
Regardless of the situation, it's vital to stay in control of your emotions and avoid taking it personally— even if the offer seems insulting. If you're unwilling to negotiate, firmly and respectfully let them know that you're set on the price. If you are willing to negotiate, be prepared with a counteroffer that you think is fair, and be patient when communicating.
How do you use lowball in a sentence?
Within the context of business and sales, examples of how to use lowball in a sentence include:
"That copy editor lowballed their quoted rate."
"The accountant lowballed a quote to do my taxes and the cost doubled when he submitted the form."
"The salesperson lowballed the customer on the price of the car."
"This guy claims I lowballed the price of his car."
How do you lowball an offer without insulting someone?
If you feel the need to lowball an offer, it's best to take measures to come prepared. Research comparable values and pricing. If applicable, make a list of things that may diminish the object's value or otherwise justify your meaning for paying less. Finally, consider why the seller is selling. For example, your negotiations may look very different if someone is selling their home because they have to vs because they want to.
What is the high or low ball?
The highball/lowball are hardball amenability techniques for selling and negotiation. The highball technique is when a seller sets their first offer high above what they hope to sell for, knowing they'll likely be negotiating down. The reasoning behind the highball tactic is that overly inflated expectations are easier to come down from than a lowball offer that you can't negotiate upwards.
Example: When selling an item on an internet auction site, an individual may list it at a price twice as much as they're meaning to accept to provide room for negotiation if necessary.
The lowball technique describes a tactic in which the item is offered at a lower price than the buyer expects to get them to commit to the purchase, then the price is increased after they've committed.
What is the origin of the word "lowball"?
While the origin of the term lowball isn't entirely known, it's likely derived from the American railroad term describing the position of a ball signal indicating stop.
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