As a machinery dealer, I hear the word “fair” thrown around a lot during negotiations with customers. I think most people don’t mean any harm when they say it. They say it because they’ve heard other people say it. They think it sounds genuine and persuasive. But it grates on me because what does it even mean when you say the word “fair?” In Webster’s dictionary, “fair” is defined as, “Marked by impartiality and honesty: free from self-interest.”
Let’s be honest with ourselves, in our deal we’re both negotiating in our own self-interests, so don’t talk to me as though you’re an impartial judge. I still believe in being truthful with customers in negotiations, and I care for the welfare of others, I just don’t think it’s accurate to label business agreements as “fair.”
I admit, it’s hard for me to not say “fair” sometimes when negotiating, so I have a few alternative phrases I plug in when I’m tempted to say the word. I say things such as, “That idea makes sense,” or “That sounds sensible,” or “That sounds good.” Everybody gets the meaning, but I don’t have to say the dreaded word.
Unfortunately, sometimes you just have to live with using the word “fair” when making deals. It’s always used by parties in Graff-Pinkert’s business brokering division. It seems like every selling company starts out valuing their business at 6-7 x EBITDA, while every prospective buyer says “fair market value” for a machining business is 3-5 x EBITDA.
I admit, there is a valid rationale for using the phrase “fair market value” in the case of buying and selling businesses. In such a huge transaction, it’s helpful to have a price range as a starting point for the negotiation.
But still, in the end when any deal is made, assuming everyone involved has been honest and clear (Yes, that’s a big assumption), the price agreed upon is not fair, and it’s not unfair. It’s just the price.
Question: When was the last time you paid a “fair price?”
12 Comments
fair point
Fair enough!
I’ve seen the truth of this many times during the livestock auction at the county fair.
Interesting! Please explain.
the price has two components (1) the value of the livestock and (2) the charitable support of the 4H participant. When combined, they are EXHORBINATE! when compared with the fair market price. It is a misnomer and we all know it.
It was a pun. The very lowest form of humor. Could not resist.
I like the idea that a deal is a non-zero sum game — and it is possible for the parties to have a mutual decision in a deal that shows equal “fairness” equal gain or even loss — in the results of the deal —
so “Fair ” is a Fair word to use and a goal for deal making in our fair world —
I hope both parties get a good deal and feel like they are getting a good deal.
It is just that when people label something as fair, it feels like BS some times. Particularly when they say, “We’ve given you a FAIR OFFER so take the deal.”
That said, it’s pretty easy to label certain things as “unfair.” Dishonesty, cheating, manipulation. Sometimes it is ambiguous and sometimes it is just clearly UNFAIR. I had written about that too but then I decided to focus more.
Thanks for your sincere thoughts!
I always believe it is a good deal if both parties think that they got “screwed.”
Particularly in divorces and ground wars in Asia! 😂
Glad I’m not negotiating there!
Noah, your point is excellent. The basic business conundrum is that the seller wants to sell at the highest possible price and the buyer wants to buy at the lowest possible price. So what is the fair price? At the end of the day, it is what it is.
Fair comment.
A good blog Noah
Peter