Can I Make the First Offer in a Negotiation?

Can I make the first offer in a negotiation?

We are often told to never make the first offer in a negotiation. While we fear giving a number that is too low, it is a negotiation myth that you can’t make the first offer. The following will outline why you can make the first offer in a negotiation.

In this post, you will find:

  • Outdated Negotiation Advice/ Negotiation Myths
  • What Is an “Anchor” in Negotiation?
  • You Can Make the First Offer in a Negotiation
  • What If I Don’t Know Enough to Make the First Offer?
  • Making the First Offer Benefits You 
  • Aim Higher in Negotiations
  • What If I Lose Money By Making the First Offer?
  • What If They Name a Low Anchor First?
Can I make the first offer in a negotiation?

Outdated Negotiation Advice

We are often told to never say the first number. If we give the number first, we will most certainly lose out on large amounts of money, or so the theory goes. “Because of the inherent ambiguity of most negotiations, some experts suggest that you should wait for the other side to speak first. By receiving the opening offer… you’ll gain valuable information about your opponent’s bargaining position” (Galinsky, 2004). We are afraid of what we don’t know, and what we don’t know is how much money the other party will offer. On the other hand, how effective is it to play a back and forth game of “you go first, no you go first”? 

First, you may look foolish within the negotiation process being unable to give a number or at least a range to start off the negotiation process. You may also appear underprepared. The underpin of all effective negotiations is knowledge about what you are negotiating and the value of it. If you continue to negate the opportunity to name a number, you may appear unprofessional and quite possibly undeserving. 

Furthermore, your resistance to name a high anchor in a negotiation leaves the potential for the other party to set a low anchor. 

Your resistance to name a high anchor in a negotiation gives the other party the potential to set a low anchor

Negotiation Myth

It is a negotiation myth that you can’t make the first offer. Your resistance to name a price may adversely affect the negotiation. You can make the first offer to ensure a high offer is set. 

Negotiation myth: You can't make the first offer

What Is an “Anchor” in Negotiation?

An anchor in negotiation is the number around which a negotiation will revolve. Often, it is when the first person puts forth the first number in a salary negotiation or other type of negotiation. This is the “anchor.”

Anchor: the number the negotiation revolves around

Anchors are very effective. The first spoken number is very influential. When we hear the first number, our brain automatically starts revolving around it, no questions asked. “Anchoring is a well-known cognitive bias… When conditions are uncertain, high anchors draw our attention to the positive qualities… and low anchors draw attention to flaws” (Harvard Law, 2020). A high anchor that draws attention to the positive attributes is the goal.

Anchors are very important in negotiation

You Can Make the First Offer in a Negotiation

Instead of playing a back and forth game of “you go first, no you go first,” you can most certainly make the first offer. While negotiations can in fact seem ambiguous and while you may believe “you’ll gain valuable information about your opponent’s bargaining position” if they make the first offer, the contrary is oftentimes more accurate (Galinsky, 2004). “This advice makes intuitive sense, but it fails to account for the powerful effect that first offers have on the way people think about the negotiation process” (Galinsky, 2004). By making the first offer, you hold a lot of power in the negotiation process. Do not give up your power.

You can make the first offer in a negotiation

You May Have to Make the First Offer in a Negotiation

Sometimes you just have to make the first offer. “It’s still very, very common for companies to play coy and insist you name a number first” (Green, 2019). This may very well be standard business practice for the company.

You have to “assume that at some point in the interview process, you might get asked what salary range you’re looking for. There’s a lot of advice out there recommending that you duck the question and respond with something like, “I’m seeking a fair salary that’s in line with the market” or “I’d like to learn more about the job and your benefits package before I answer that.” But I’ve got to tell you — an awful lot of interviewers aren’t going to let those answers stand. You’re very likely to get pushed to name a number, because employers don’t want to waste their time if you’re wildly outside of their ballpark” (Green, 2019). 

This is when all your hard work and research comes into play. You’ve done your homework, you have researched the market value, you’ve asked around to get a reference point from real people, and you have a range to give.

Assume that interviewers will want to know your salary range

What If I Don’t Know Enough to Make the First Offer?

If you still feel like you truly do not have enough information to avoid naming a number within the negotiation, it may hurt your appearance and credibility, but “You can try saying, “Can you tell me what the range for the position is?” And some interviewers will tell you, so it’s worth asking. But in other cases, you’ll need to be prepared to name a number yourself if you want to move forward in their process” (Green, 2019). If you’re pressed to name a range, one option is to say, “I’m still learning about the job, of course, but based on what I understand so far, I’d be looking for a salary in the range of $X–$X. Are we in the same ballpark?” (Green, 2019). The best practice would be to do as much research as possible so if you are pressed for a number or a range, you can give one. 

If you simply don’t know enough about what you are negotiating, you really will want the other party to name the number first. “There is one situation in which making the first offer is not to your advantage: when the other side has much more information than you do about the item to be negotiated or about the relevant market or industry” (Galinsky, 2004). Try to avoid this situation by being as prepared as possible.

Should I Make the First Offer?

Making the first offer can leave you feeling like you potentially left money on the table, but this is not as likely as you think. “Research on the anchoring bias has shown that negotiators may be able to gain an edge by making the first offer and anchoring the discussion in their favor. The decision of whether to make the first offer generally should be based on two factors: your knowledge of the zone of possible agreement (ZOPA) and your assessment of the other side’s knowledge of the ZOPA” (Harvard Law, 2020). This is why the negotiation tip of doing your research can never be overstated. 

do market research

Come in well equipped with research so you know the range (ZOPA) and can offer a strong first anchor. Do your research and make a high first offer so if your negotiation collaborator negotiates you down, which is accepted within the negotiation process, it will be your highest accepted price because you set a high anchor in the first place. 

Making the First Offer Benefits You 

While making the first offer can be hard, it allows you to set a high anchor. Setting a high anchor deters your negotiation collaborator from setting a low anchor, which would ultimately make the process dance around a lower number the whole time instead of a higher number you put forth. 

Furthermore, “Substantial psychological research suggests that, more often than not, negotiators who make first offers come out ahead” (Galinsky, 2004). Come out ahead in the negotiation by making the first offer.

Negotiation tip: You can make the first offer

Make the First Offer with Confidence

Come to the negotiation with confidence. “Research also shows that the probability of making a first offer is related to one’s confidence and sense of control at the bargaining table” (Galinsky, 2004). Do your research and make a confident first offer. 

Aim Higher in Negotiations

Aim higher: Results follow expectations

While making the first offer can be intimidating, it can be extremely lucrative. You can ask for more than you think. Contrary to common belief, we are not asking for enough. Research shows that “most negotiators make first offers that are not aggressive enough” (Galinsky, 2004). Aim even higher. Ask for more. 

Bozoma Saint John @badassboz, Global Chief Marketing Officer at Netflix, gives solid negotiation advice telling negotiators to, “Give the number first. Make it high as hell because then you can’t be low-balled … Do the work. Don’t just call a number out of the sky. Know the range and then exceed the range because then you can negotiate down just a little bit” (CBS News, 2018; Klein & Ma, 2020). Do your research. Have firm footing while understanding the range. Then go above the range like Bozoma Saint John directs. Take control of the situation and ask for more. 

Give the number first. Make it high as hell

Be sure your anchor is a higher price than you desire so that within the negotiation process, the lower negotiated amount is still within your sweet spot amount. Make your offer considers the range, but as Bozoma Saint John demonstrates, “exceed the range because then you can negotiate down just a little bit” (CBS News, 2018; Klein & Ma, 2020). Expect to be negotiated down, it’s part of the negotiation process. Coming in with a high number shows you’re confident in your skills, you’re worth it and most of all, you know your worth. Confidence is hard to turn down. Ask for your worth and (at least a bit) more.

What If I Lose Money By Making the First Offer?

Making the first offer can leave you feeling like you potentially left money on the table. But this is not as likely as you think.

“People hate to go first, if only because going first might mean missing out on an opportunity… In the real world, that rarely happens, because the other person almost always has a reasonable understanding of value” (Haden, 2016). 

Do your research and make a high first offer so if your negotiation collaborator negotiates you down, it will be your highest accepted price because you set a high anchor in the first place. 

Can I Make a High First Offer in This Economic Climate?

Right now may seem like a difficult time to aim higher. But an economic downturn disproportionately affects those typically underpaid. Some people are making money right now, and lots of it. Some companies are very well off. It is a difficult concept to aim higher, but the higher you aim, the higher your result. 

Do not let the economic climate determine your worth

Do not let this economic downturn pressure you into thinking you are worth less. This is precisely what happens in each economic downturn. It reinforces that the people on the bottom stay on the bottom. An economic downturn affects those underpaid the most. An economic downturn happens approximately every 10 years (2020, 2008, 2000, 1991, 1982…). This is a pattern (different each time, but still a pattern). If you stop getting paid your worth every time there’s an economic downturn… you’re losing thousands upon thousands of dollars. If you get scared or feel timid or feel like it’s not “right” to ask for money during this time… just don’t. Get paid. 

Do not be underpaid in this economic climate

Make a high first offer. Ask for more. Get paid. Results follow expectations. Stop thinking small. Think big. Ask for more.

What If They Name a Low Anchor First?

What happens if they set a low anchor? First assess the number, then work to discredit it by using your gathered research. Then carefully introduce your own higher anchor offer (Harvard Law, 2020). “A common mistake is to respond with a counter¬offer before defusing the other side’s anchor in negotiation” (Harvard Law, 2020). 

Make sure you work to discredit their low offer in order to introduce your higher offer with credibility. “After defusing the anchor, move quickly to your counter proposal, with the caveat that mentioning the anchor explicitly and repeatedly might validate it. Then, when making a counteroffer, be sure to explain why it is fair and justifiable” (Harvard Law, 2020). You have done your research so you can accurately illustrate why their offer is not appropriate and why yours makes more sense. 

Make the First Offer

It is a negotiation myth that you can’t make the first offer. Take control. Do your research. Talk! To! People! Find out how much the highest earners are making and go from there. Research the range, then exceed it. It can be tricky to make the first offer, but go at it with confidence. Your resistance to name a high anchor offer in a negotiation potentially allows the other party to set a low anchor offer. Confidence will pay off. So will your research. And if you’re not confident, fake it till you make it and make the first offer. 

You got this. 
Negotiate your worth. 
Make the first offer.

I'm worth it


Sources


Disclaimer: 
While the contents of this post and blog come from research and personal experience, each experience, situation and/or person has their own unique circumstances. This is not negotiation, financial or any other form of legitimate or official advice from an expert. Each individual should do their own independent, comprehensive research. Negotiation, career and all other decisions are the sole responsibility of each individual or party. Details found on the blog and in individual posts are opinions and should be treated as such for entertainment purposes only. Read further disclaimer information in the footer and on the Disclaimer page. 

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