How to Use Precise Numbers to Avoid Redlines
The party's liability will not exceed 6.783x fees paid or payable ("Supercap")
We usually write Supercaps as nice round numbers.
3x
5x
But what about...
6.783x
WHAT!?
Hear me out...
If our goal is to avoid redlines, maybe we should ditch the round numbers like 5x and instead use precise numbers for our Supercaps.
Consider:
● A study found that beggars who asked for $.17 made more than beggars who asked for $.35. Precise numbers like $.17 disrupt our expectations and boost noticeability.
● Figures are considered more believable if they're specific. In another study, people rated a deodorant better when it was advertised to last 43% longer than the same deodorant that was advertised to last 50% longer. Why? If you're sure about something, you'll give precise information like 43%, but if you're unsure, you'll be vague and use a round number like 50%. (Another example: how old is your spouse? Hopefully you can answer that question with precision, right?!)
● Precise numbers imply that careful consideration was given to arrive at the number. In comparison, imprecise numbers suggest less thoughtfulness. Another study found that home sellers who set a precise asking price - like $599,499 rather than $600,000 - sold their home for closer to their asking price than those who used the round number.
So how can we apply this to Supercaps? Why might we use a Supercap with a precise number like 6.783x ?
✔ Boost noticeability. A precise number like 6.783x calls attention to the middle ground that a party is proposing between extremely limited liability and unlimited liability. The precise number is noticeable and loudly invites the counterparty to meet at the middle ground rather than redline and haggle over round numbers.
✔ Convey certainty. Round numbers feel like they were pulled out of the sky at random, which suggests they are more easily negotiable. But if you see a Supercap with a precise number, you may think: "If their Supercap is 6.783x, there must be a good reason for it, so they probably wouldn't accept a redline to change it to 7x."
✔ Show care and thoughtfulness. If you see a Supercap with a precise number, you'll assume careful consideration went into that figure. If you want to redline the Supercap, can you reciprocate that careful consideration? How would you propose to redline a Supercap of 6.783x? Do you have your own precise number or would you just be pulling a larger round number from the sky? If you don't feel up to the task, you may avoid the redline.
Conclusion
So that's why we should rethink using round numbers for Supercaps and instead consider precise numbers like 6.783x.
What do you think?
How would you respond if you were reviewing a contract that had a Supercap of 6.783x ?
We usually write Supercaps as nice round numbers.
3x
5x
But what about...
6.783x
WHAT!?
Hear me out...
If our goal is to avoid redlines, maybe we should ditch the round numbers like 5x and instead use precise numbers for our Supercaps.
Consider:
● A study found that beggars who asked for $.17 made more than beggars who asked for $.35. Precise numbers like $.17 disrupt our expectations and boost noticeability.
● Figures are considered more believable if they're specific. In another study, people rated a deodorant better when it was advertised to last 43% longer than the same deodorant that was advertised to last 50% longer. Why? If you're sure about something, you'll give precise information like 43%, but if you're unsure, you'll be vague and use a round number like 50%. (Another example: how old is your spouse? Hopefully you can answer that question with precision, right?!)
● Precise numbers imply that careful consideration was given to arrive at the number. In comparison, imprecise numbers suggest less thoughtfulness. Another study found that home sellers who set a precise asking price - like $599,499 rather than $600,000 - sold their home for closer to their asking price than those who used the round number.
So how can we apply this to Supercaps? Why might we use a Supercap with a precise number like 6.783x ?
✔ Boost noticeability. A precise number like 6.783x calls attention to the middle ground that a party is proposing between extremely limited liability and unlimited liability. The precise number is noticeable and loudly invites the counterparty to meet at the middle ground rather than redline and haggle over round numbers.
✔ Convey certainty. Round numbers feel like they were pulled out of the sky at random, which suggests they are more easily negotiable. But if you see a Supercap with a precise number, you may think: "If their Supercap is 6.783x, there must be a good reason for it, so they probably wouldn't accept a redline to change it to 7x."
✔ Show care and thoughtfulness. If you see a Supercap with a precise number, you'll assume careful consideration went into that figure. If you want to redline the Supercap, can you reciprocate that careful consideration? How would you propose to redline a Supercap of 6.783x? Do you have your own precise number or would you just be pulling a larger round number from the sky? If you don't feel up to the task, you may avoid the redline.
Conclusion
So that's why we should rethink using round numbers for Supercaps and instead consider precise numbers like 6.783x.
What do you think?
How would you respond if you were reviewing a contract that had a Supercap of 6.783x ?