As a child, I was taught to listen to and respect the views and opinions of adults. Like many children it was not uncommon for me to blindly follow their direction. When I started my golf ball business at age 11, I came to realize that “serious” business was nothing like operating a lemonade stand. I had a dilemma. Even though I was young, the adults I dealt with showed no charity when negotiating with me—especially when bigger dollars were at stake. I wanted to be friendly and social with potential buyers, but at the same time I had to stand firm on prices and not be intimidated by adults. I had to be respectful despite people telling me my prices were too high or that my selection wasn’t very good. Even though the great majority of my customers were impressed with my selection of golf balls and their condition, I could not help but feel hurt by those few who attacked the value of the product I was selling in an attempt to lower the price. Each of those interactions stayed with me for some time and to this day I can still remember some of the dialogue. Perhaps I was too sensitive, but it also forced me to come up with a product price structure that I could confidently defend.
I still respect adults but when it comes to negotiating, I have had to learn a new approach or strategy. Negotiating in an adult world requires expertise and common sense. In the golf ball business, or any other business, it is essential that you understand the characteristics, strengths and weaknesses of every brand of product that you sell and the demand for that product in the market. In my case it is the understanding of golf ball brands and how much they are worth to people both new and used. As I improved my knowledge of my product it was less difficult for me to say “no” to an adult who was attempting to negotiate a price. And, on occasion, this greater knowledge made me feel comfortable dropping my price.
For the most part, I understand the value of my product and will not give unnecessary discounts for any reason, even to my friends. I don’t want the buyer to feel disrespected or take what I’m saying the wrong way. Initially, I was intimidated by people who were a lot older and bigger than me. I wasn’t comfortable explaining my product knowledge to adult customers. It was difficult for me to explain my reasoning for prices because I hadn’t done enough research ahead of time and I was very shy. Now after several years, I am totally comfortable explaining my products and saying “no” to customers who want additional discounts. Sometimes, clients are unsure about a particular brand of ball and want to negotiate the price. I’ll explain to them what type of golfer the ball is best suited for and direct them to a ball that’s best for them within their price range. This usually satisfies most customers because I am doing them a favor by trying to improve their golf game and saving them money at the same time. It is a win-win situation for everyone.
In order to negotiate with confidence you must do your homework. It is essential to understand product value, and how to keep costs low in order to maximize profit.
Crafty buyers will often try to figure my costs in attempt to negotiate from that level. One buyer, Billy, wanted to negotiate the price of a dozen of golf balls down 65%. His reasoning was all that I had to do is walk around the golf course and pick them up. This was a ridiculous attempt at negotiating because Billy didn’t account for all of the factors. He didn’t realize that my time is worth something and that I have to clean, classify and inventory the balls. Also, he didn’t allow for the risks of coming into contact with poison ivy or ticks, two very real risks when collecting golf balls. Billy’s rationale for a price reduction did not take into account all that I, as the seller, had invested in my product. A fair price is usually better indicated by the market or what buyers are willing to pay. I felt comfortable rejecting Billy’s outlandish offer because I knew from tracking previous sales that I could easily sell the balls he was interested in at a higher price. That was one important piece of information that I had and Billy did not. It definitely gave me leverage in our discussions.
Understanding that the market dictates prices is key. If I sell a lot of a particular brand of ball, I know the market is telling me something like maybe my price is too low. On the other hand, if I have a golf ball that is not selling at all, then either I am not marketing it correctly or the price may be too high. Market demand is a very effective teacher when it comes to pricing a product. Knowing that other people are comfortable with my prices gives me confidence and leverage when negotiating. It is important to know which price levels allow you to sell products quickly. If the product is not selling well, it may make sense to lower the price slightly and test the market’s reaction to the new price.
Regardless of the business you are in and who you are dealing with, when selling a product confidence in negotiating will only come after doing your homework and conveying your knowledge in a respectful way.
Evan Ruccolo will be an 11th grader this fall at Saint John’s Preparatory School in Danvers, Massachusetts, USA. He is the proprietor of the Boston Area Golf Group.