In any negotiation your opening offer should be more than you would settle for (if you’re selling, and less than you are prepared to pay if you’re buying).
The reason is that you don’t know how much the other person is prepared to pay, so you have to ask for the high end in case they will pay that. If not then you have asked for too much and you’ll probably have to come down. But since they’ll never offer to give you MORE than you ask for, you have to ask for more than you expect to get.
Which is fine, but what if you make your opening offer and they ask you why on earth you are so expensive. Ideally you need to have a plan ready to somehow justify this potentially extreme opening offer.
There are two ways to justify your opening offer, and they are either to sell the benefits – the value to the other person, or to explain the costs to you.
Selling the benefits – to them – for example: a negotiation training course might be really expensive if it’s really good, and that’s because you will gain much more than the price if you come on the course. But still, why is it so expensive when it doesn’t cost much to run it? The answer is that if it has a high value then other people will pay a lot for it – I’d be turning higher-paid work away if I agreed to do your course for a low price. In my case, because I’m limited for the number of days I can in a year, this is often truly the case. And in your negotiations it might be too.
Explaining the costs – to you – the other way to justify an opening offer. I was asked to do a one hour talk in Yorkshire, which is 5 hours drive each way, so I quoted quite a high price. Doing the talk is a pleasure, I’d do it for free if I didn’t have a mortgage to pay, but ten hours of driving on English motorways in the winter just isn’t fun. So when my customer exclaimed that for a one hour talk my hourly rate was “More than Ronaldo gets” (I wish!) I explained – completely truthfully – that it was 2 hours of prep, ten hours of driving, an evening away from home at a hotel the night before, half the money goes in petrol and tax and sickness/holiday/pension which I don’t get given to me like he does, …the hourly rate went down by a factor of about 20 – and he was happy. He could have negotiated me down a bit, but he didn’t.
Even if you are going to come down from your opening offer you still need to justify it, so you don’t look dishonest. But it’s even better if you justify it so well, or sell it so well, that the other person doesn’t even try to get you to come down.
How will you justify YOUR opening offer?
PS – Here’s a special coupon enabling you to get my Udemy negotiation course for only £10. It’ll save you thousands, so £10 is a ridiculous bargain.