MF 213 : Negotiating on Poshmark: know when to accept, counter or decline
In this bonus episode, I cover strategies for negotiating and whether to accept, counter or decline an offer. More at www.bemovingforward.com.
As the Kenny Rogers’ song goes, know when to “hold em,” “fold em,” or to “walk away.”
Continuing on our discussion on pricing, we take a closer look at negotiating offers. As I mentioned on yesterday’s episode, a friend of mine started selling on Poshmark last fall. She listed an expensive name-brand purse that she only used once or twice. Essentially, it was a new purse. She received an offer that was almost half what she listed it for. She reluctantly accepted and immediately regretted it. I call this “seller’s remorse.” When we got together for coffee, I asked her why she sold it when she knew the offer was too low. Her response was that she wasn’t sure she’d ever get another one. That’s what we call FOMO: “fear of missing out.” Maybe, we should call it FOMOOP: “fear of missing out on Poshmark.”
When it comes to offers, there’s a strong psychological pull you may feel when you get your first offer, no matter the amount. An offer is an indication that a person is willing and ready to buy your item. Respect that, embrace that, celebrate that. But don’t accept it if it’s not right.
Let’s cover a methodology that’s has served us well and may be helpful to you if you’re a first-time seller on Poshmark.
The “satisfaction” quotient
Think of pricing as an equation that involves satisfaction. Satisfaction can be defined as your happiness, your profit margin, your gut, your “mojo.”
The original price, whether it’s what you paid for the item, what it’s worth or the fair market value, represents maximum satisfaction. It’s the ideal world. If someone were to buy something at or above what you paid for it (called “retail arbitrage”), you would achieve max satisfaction. You would have no regrets and a big smile on your face after closing the deal.
The next level is what I call optimal satisfaction. On Poshmark, most items are discounted from the original price. For example, the original price is $500 but you decide to sell it for $450 or $400. You are offering a discount and giving up a small slice of satisfaction to facilitate a sale. Perhaps, it’s used but in near-new condition. Or as in the case of my Dad, you bought it wholesale (see episode 212) and are still clearing a healthy profit margin if you sell it at the discounted price. Optimal satisfaction is when a buyer buys your item outright at your listed price without any haggling or offers. There’s no further loss of satisfaction than what you’ve already given up in listing the item for sale.
Below this, you are entering into the wide realm of offers and negotiation that can be confusing and overwhelming. Here are some guideposts that may help you navigate this.
Upper bounds, lower bounds, zone of agreement
Just listen to Kenny Rogers’ “The Gambler”
A great primer on negotiating on Poshmark and in life.
First, think of negotiating as a balance between the amount of satisfaction you’re willing to give up and a price that a buyer is willing to pay for your item. If you agree to sell at any price below your list price, you are giving up a degree of satisfaction. You’re compromising to sell the item and turn it into cash.
Next, it’s helpful to have some bounds. Picture an upper bound, a lower bound, and an area in between which we’ll call “the zone of agreement.”
Let’s start with the lower bound first because this is what is most confusing for buyers and sellers. Think of the lower bound as a floor, an absolute minimum such that any price below that, it’s not worth selling the item. It’s not even worth trying to counter-offer because it’s so far off the mark. Do NOT think of a lower bound as a “bottom line sale price.” One of my biggest pet peeves is when a buyer says “what’s the lowest price you’ll accept?” My answer is simply the price we have listed. The sale price is the lowest. It’s me giving up a level of satisfaction in order to sell it. If I’m open to negotiating the price or entertaining an offer, that simply means I may consider giving up more satisfaction. A lower bound should not be thought of as a price you will sell at if it’s offered. If you get an offer that’s right at or slightly above the lower bound, you may or may not decide to sell it at that price. A lot of factors go into making that decision, both financial and personal. It is simply a lined underneath which you will decline any offers.
The upper bound is a price that’s below your sell price but fairly close to it. The upper bound can be defined as the sale price itself but if you’re open to negotiating, come up with a number that’s a little lower. As with the lower bound, you won’t necessarily sell at it that price though you’re more likely to since it’s closer to your list. It’s simply a guidepost.
The zone of agreement (ZOA)
The zone of agreement is the area in between, where an offer falls between the upper and lower bound. Depending on the item and circumstances (e.g. your desire to sell it, how much space you will free up, how many of the items you have, etc.), the ZOA represents a price range in which you’re willing to consider selling. If an offer falls in this zone, you may decide to sell, you may decide to counter or you may decline altogether. It’s not meant to be a hard and fast area nor a “bottom line.”
When you start listing and pricing your items, think of an imaginary upper and lower bound. You can write these down or keep them in your mind. If you’re a first-time seller, it may be helpful to write them down in a journal or keep on your notes app. You will NOT share these publicly. This is simply an internal guide for you as a seller.
Scenario A: I’ve listed a pair for shoes for $250, never worn. I originally paid $300 for them and they’ve been sitting in my closet for two months. My upper bound is $220, my lower bound is $180. Let’s say I get an offer for $50. Since that offer is way below my lower bound, I decline.
A week goes by and I get a second offer for $185. This is within the ZOA and just slightly above my lower bound. It’s high enough that I don’t have to decline (though I can if I want to) but it’s low enough that I may not want to accept right away. If the shoes are limited collector’s items, they’re rare. If they’re common and there’s a sale going on at your local shoe store, they’re easy to get. Think of the circumstances and your personal considerations. I can accept the $185 or I can counter-offer for a little higher, say $200. There’s room to negotiate and I can try to get this more centered within the zone of agreement. The buyer may decide to engage in negotiation and counter offer for a lower price than my counter offer but higher than the original bid (e.g. $190) or he or she may decide to walk away. Don’t feel bad if he or she declines. Knock that FOMOOP out of your head. If it doesn’t work out, move on, and wait for the next buyer.
Let’s say the person walks. Two days later, I get a bid for $210. It’s lower than my sell price so I’m giving up a little more satisfaction but it’s close enough to my upper bound that I think it’s worth it. I sell and everyone is happy or adequately satisfied.
Scenario B: I decide to sell a suit on Poshmark that I originally paid $1400 for. I’ve worn it a few times but kept it in really good condition. I list it for $1250. I decide my lower bound is $900 and my upper bound is $1100. I get an offer for $1050. Even though the offer is the same amount less ($200) as in scenario 1, the two are completely different as it’s a higher priced item. I can work with this and either accept or counter since the offer is within my zone of agreement. In this case, I would probably accept since it’s close to the upper bound.
As the two scenarios illustrate, you can use guideposts when negotiating price and offers. Your gut can be helpful too. Just don’t use it to accept something you know won’t satisfy you as a seller. In other words, don’t fall into the trap of FOMOOP or seller’s remorse. If it helps, write your bounds and ZOAs down as you begin listing on Poshmark. Eventually, this will become second nature and you’ll be able to negotiate on Poshmark with confidence and satisfaction.
For more on pricing, check out episode 212.
Download my 5-step checklist for getting started on Poshmark
For more on pricing, check out episode 212
MF 212 : The art of pricing items for sale on Poshmark
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