Should you make the first offer?

Why the first number carries so much weight

Whatever number lands first becomes an anchor. Everyone starts judging later offers against it, often without realising they're doing it. Negotiation Genius points out that anchors work best when people aren't sure what a fair outcome looks like, and in most negotiations nobody is completely sure.

Being an expert doesn't make you immune. In 3-D Negotiation, David Lax and James Sebenius describe an exercise where executives heard a meaningless opening offer before naming their own price. The group that heard $12 went on to propose $19.80 per unit on average. The group that heard $32 proposed $30.10. They also describe experienced real estate agents who toured a house, had pages of data to work from, and were still pulled toward an irrelevant figure.

Go first when you know the range

For Malhotra and Bazerman, it comes down to information. If you've got a decent read on the other side's walk-away point, open with something ambitious enough to anchor the talks in your favour. If you haven't, hold back and learn more, even if that means they get to open.

Leigh Thompson says much the same thing in The Mind and Heart of the Negotiator, in fewer words: make the first offer if you're prepared. If "walk-away point" is new to you, our explainer on BATNA is a good place to start.

The cost of going first blind

Chris Voss is warier about going first on price. In Never Split the Difference he tells stories of people who named a salary before they understood the market and ended up anchoring themselves low. That's the real risk. If you don't know the range, your opening number can land on the wrong side of it, and by the time you find out, it's very hard to walk back.

How to open well

You want an opening that's ambitious, but one you can defend with a straight face. You'll rarely finish higher than where you started, so there's no prize for being modest. On the other hand, a number you can't explain tends to get dismissed rather than discussed.

Keep the explanation short. One or two solid reasons sound confident, while a long list of justifications can make even a good number sound nervous.

If you can, open with a package instead of a single figure. Price plus timing, payment terms or scope gives the other side something to trade with, so they have more to ask for than just "lower".

When they anchor first

Thompson's advice is to re-anchor straight away instead of bargaining from their number. Malhotra and Bazerman add a useful point about extreme offers: your job is to reset the conversation, not to show how insulted you are. If the other side needs to retreat a long way, give them a little time. People find it much easier to come back a day later saying they've re-run the numbers than to back down on the spot.

Be careful about splitting the difference, too. Thompson specifically warns against the even-split ploy, and it's easy to see why. Meeting halfway between a fair number and an inflated one still leaves you paying for half the inflation.