Every now and then I get asked about opening first in a negotiation: “Surely Chris if you get your stake in the ground first then that will ‘anchor’ the negotiation psychologically: that will be the area where it all stays”. But no this is wrong, totally wrong, definitely wrong, and I’ll explain why in this article.
First, anchoring is a perfectly valid NLP concept. Yes, the first number you hear does influence you as to what is ‘normal’ – so for example when selling it’s a good idea to quote your highest price first (for the deluxe option) and then come down from there, because everything else seems cheap in comparison. Anchoring in action. And so in a negotiation you’d be mad to tell them your lowest price (if selling) and then ask for a higher one, or if buying you’d never tell them you maximum budget and then ask for a much cheaper price. Anchoring.
But let’s think about who opens firsts – which is a whole other subject. Does the-first-number-I-say affect them, due to anchoring? Yes. So I must be very careful about what it is, and get maximum information before I open. Does the first number they say affect me, anchor me? Only if I let it! If I know it’s all a game and that they are just making crazy offers, that won’t anchor me. So that’s my first point – anchoring only affects THEM, and only if they aren’t a trained negotiator (which to be fair is most often the case).
But where to put the anchor…??
If I open first then yes, the first number, the one that anchors them, will be at my upper limit (if selling) and lower limit (if buying). So that’s not bad. But maybe I can do better than that!!
What if I can get THEM to open first (and of course ignore the tendency to anchor to their number, which I can do, and I can teach you to do as well). There are two options that might happen:
Option 1 – it’s good news.
Their opening offer might be a pleasant surprise. This only happens 20% of the time but it’s well worth doing for those 20%s I can tell you. If they open higher than you were going to open (if you’re selling and they tell you their budget) or lower than you were going to open (if you’re buying and they quote a price) then you are already ahead of the game compared to the ‘anchor first’ merchants. By getting the other person to open first they have foolishly put the anchor in the wrong place, a place that is REALLY good for me!
Thank goodness I didn’t take the advice of the anchorers and open first!
And then, if I want, I can adjust the place where I WAS going to put my first opening offer, and put it even higher (if I am selling) or even lower if I am buying. I can adjust my campaign in the light of getting the information out of them first. Or, if I’m feeling nice, I can just (“reluctantly”) accept their excellent offer. So easy!!
Personal / buying example: https://www.youtube.com/watch?v=0fDsXWRk4Uw
Work / selling example: https://www.youtube.com/watch?v=sXhrZYgEyhk&t=8s
But what if we get…..
Option 2 – Bad news.
What if I get them to open and their opening offer is really low (if I’m selling and they tell me their – alleged- budget) or if I’m buying and they quote me their price and it’s really high.
Oh well, it was worth a try!
And now one number, theirs, is out on the table, and I must make sure I don’t get anchored to it. It is irrelevant because it’s not what I was hoping to hear. Maybe the deal will be tough, maybe there is no deal to be had, maybe they are just an experienced negotiator trying to mess with my head, or maybe they’ll end up moving a long way away from this first number. Who knows. It’s just a start, and we’ll see…..
So l’ve learned some information, which I can ignore, but before I do I’m going to use it to improve my plans. I’m not going to change my walk away point, but I might adjust my opening offer in the light of theirs. But that’s my choice, based on logic and strategy (see another article for how to set your opening offer) – nothing to do with a subconscious weakness like anchoring. The value of extra information outweighs the power of anchoring, if I know about anchoring – which I do. And so do you, now. Anchoring only affects you if you don’t know that negotiating is just a game, and first offers are a joke (- or should be!)
So now I open. Second. With the benefit of knowing their position, and having already taken advantage of it if their opening position was a poor one. Opening is a shot in the dark if you have to go first, it’s risky. Opening second is still tricky, but much better.
And this number I come out with, my first offer, has a strong impact on them. It will probably anchor them. It will hit them hard, psychologically, maybe even shock them, but even if they were expecting it, it will become the number they focus on. They probably knew that their first number was ‘just trying it on’, but MINE is REAL. So I still get the effect of anchoring, on them, which is where I want it. There is no anchoring on me, because I am ignoring their first number as the made up rubbish that it is.
So yes, anchoring can affect the other person, and whether or not I open first, they will be anchored to my first number, and I’ll make sure I ignore theirs and talk about mine all the time. All moves will be relative to mine not theirs. If I’m selling it might be a 2% decrease in price from MY price if they give me something in return, to make it possible. If I’m buying it might be moving slightly higher than MY first offer – I could afford a bit more if they give me something extra for it. I still get the anchoring effect on my opening offer, even if I go second.
So – get them to open first, it might be good news, it won’t anchor you unless you let it, and if it’s bad news you at least know more about their position. Then you make YOUR opening offer, now in the optimum place, and that’s the one we anchor to. Anchoring exists but is NOT a reason to open first.
More info here:
https://www.udemy.com/course/a-practical-guide-to-negotiating/
