The insult price

by Dave Schuler on October 3, 2005

A situation arose today which in retrospect I realized had to do with the insult price.

When negotiating a sale there are a number of different prices that it’s helpful to know about. First, there’s the asking price. This is the initial price that the seller asks. Then there’s the selling price—the price at which the sale is actually concluded. There’s also a target price. A sale can be concluded at any point at or above the target price. There may be any number of offers (prices below the target price) as well.

And then there’s the insult price. An insult price is an offer so low that it’s taken by the seller as a call by the prospective buy to end negotiations.

Here’s an example. Let’s say I’m asking $1,000 for something and my target price—the price I’m actually willing to sell for—is $700. Let’s also say my cost is $500. I won’t accept an offer of $600 since it’s beneath my target price. I’ll be thrilled with an offer of $800: that would give me $100 over my target.

But if the prospective buyer offers me $10 to take it off my hands that’s an insult price. Buyer is asking me to take a loss of $490 and I just won’t do it. It would be better for buyer to just indicate a lack of interest since that might elicit a new asking price from me.

Sometimes insult prices are quite innocent arising from ignorance of the value of the item to the seller. Sometimes they’re deliberate. But in any case it’s a cultural issue which is why, whether you’re selling a used car or concluding a treaty it’s helpful to know the expectations of the people with whom you’re dealing.

Today someone thought they were being generous and what they were actually doing was offering me an insult price. That just made me mad and less inclined to bargain.

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