is a common (mis)understanding
that for sales negotiations, it's better
to wait for the other party to make the
first offer. However, I have experienced
number of times, you may win by making
the first offer yourself.
this article I share; how the 'first offers'
have influenced the negotiation &
offer 'the Anchor'.
I have observed; in a condition of great
ambiguity and uncertainty, first offers
have a strong anchoring effect. This offer
exerts a strong gravity during the rest
process of negotiation. The discussions
& posturing during the negotiation
process revolves around this offer.
might say the experienced negotiators
are immune to the 'anchor'. I have a observation
& its NO, they are not immune!
Its' because every item under negotiation,
(whether product &(or) services),
has both positive and negative qualities.
The qualities that suggest a higher price
and qualities that suggest a lower price.
High anchors invite our attention toward
an item's positive attributes; low anchors
direct our attention to its flaws.
when should the first offer be made?
you are confident & have good sense
of control, probably you are the first
one to make an offer. Those with less
power by virtue of lack of power (perceived
or real) & knowledge are afraid to
make an offer. By making the first offer,
you will lead the negotiation in your
final outcome of a negotiation is affected
by whether the buyer or the seller makes
the first offer. Specifically, when a
seller makes the first offer, the final
outcome price tends to be higher than,
when the buyer makes the first offer.
aggressive in submitting the first offer.
The first offer should be aggressive but
not absurdly so. Many times we fear aggressive
first offer may scare or annoy the buyer.
However, I feel this fear is bit exaggerated.
aggressive first offer can work in your
favour for two reasons.
- More extreme first offers lead to higher
- Extreme first offer allows you to offer
concessions and still reach an agreement
that's much better than your alternatives.
is your target aggressive price?
While developing an aggressive first offer,
have two values to focus on.
consider the alternatives to an agreement
and create a reservation price-a specific
value at which you'd prefer to walk away.
Now you'll be prepared to accept any agreement
that exceeds your reservation price and
reject any value that falls below it.
- Second, determine your ideal outcome,
or target price-the agreements or values
that would fulfil all of your negotiation
hopes and desires. Knowledge of your reservation
price is crucial, but it's your target
price that you should pay attention to,
when developing a first offer.