Home Management If it’s a Rounded Number,
The Price May Be Right in Negotiations
If it’s a Rounded Number, The Price May Be Right in Negotiations
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If it’s a Rounded Number,
The Price May Be Right in Negotiations

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Many factors come into making an offer to settle. One of them may be the basis upon which the other party will decide whether or not to accept it. Recent research shows that the more rounded a number, the more it will appeal to the emotions of the party deciding whether to take it or not. A more specific number would appeal to a more fact driven situation.

This study published in the Journal of Consumer Research found that consumers are drawn to prices with rounded numbers when a purchase is motivated by feelings. These rounded numbers can lead to an objective feeling the price is right for the situation. Five studies as part of the research showed that,

  • Rounded prices ($100.00) make consumers more likely to buy a product if it’s primarily driven by feelings (buying a camera for a family vacation).
  • Non-rounded prices ($98.76) make consumers more likely to buy the same item if the purchase is rational or utilitarian (buying a camera for a business or class project).

 

Rounded prices vs. Non-rounded prices

Researchers suggested small changes could have a big impact on sales. If a product is used for recreational or personal re
asons (vacations, clothing or houses) the sales could benefit from rounded prices. Practical products (appliances, toothpaste) might sell better with non-rounded prices.

In the context of negotiation or mediation, this could play out depending on the nature of the legal action and the identities of the parties involved, so there are no hard and fast rules.

  • If the legal action involves an individual suing for personal injury or employment discrimination, a more rounded number may appeal to the person’s sense of right and wrong and of being vindicated.
  • If the legal action involves a business transaction, the parties may be more analytical and practical, considering how much of the potential damages would be paid by the proposed settlement as well as a calculation of the chances of success at trial.
  • This also could vary on the personalities of the parties involved. The person suing for personal injuries may be very analytical and less emotional, while a business executive or owner may be very emotionally involved in a lawsuit, feeling that he or she (not just the business) has been wronged by the allegations or by the other party.

Though settling a lawsuit is not buying toothpaste, there are similarities. One side (or both) is trying to sell the resolution of a lawsuit while the other party is deciding what amount of money (plus actions by the opposing party) is enough to purchase their agreement to withdraw legal claims. If you have a feel for how the other party will decide whether to accept your offer (emotionally or analytically) you can decide if a rounded or more specific figure might increase the chances of success.

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Steve Mehta
Steve Mehta
Steve Mehta has been frequently asked to mediate cases that involve a variety of complex and emotional issues, including elder abuse, medical malpractice, real estate, personal injury, employment, probate, and business matters. Since 1999, he has mediated several thousand cases.

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