Effective negotiating strategies: never throw out the first number

Posted by admin on November 12, 2008 in Negotiations

I use to be in a fantasy basketball people. One of the other fantasy owners was the son of a lawyer and was destined to be a lawyer (and he actually did become one during my 5 year stint in the pool). He never ever made the first trade offer. He would always start with “I am interested in [insert player here] on your team. Why don’t you make me an offer?” or “I hate [insert player] on my team. If you want him, make me an offer.”

It was a very clever tactic on his part because he was letting the other fantasy owners set a valuation for a player which allowed him to counter-offer. If your opening offer was too high, you just set the floor too high for yourself. If it was too lower, he could withdraw without ever showing what he thought a player was worth.

In essence, he was following a rule that all good negotiators adhere to- never throw out the first number. Whoever throws out the first number always sets a valuation and basis of negotiations and allows the person to counter-offer based on that. If you have negotiated against yourself and gave a too high/low number, it just may be taken.

In non-fantasy pool life, think about how this works. Most car dealerships teach their salespeople to ask customers “how much do you want to spend?” The trick in the automotive sector is to tailor monthly payments to how much you say you want to pay even if the loan ends up being unusually long and detrimental to the customer. But, in the heat of the battle, the customer thinks they got a good deal since the salesperson got them a car at the price they told them to.

Or, to turn the tables, I have seen this done a lot to salespeople in the business world. The salesperson gives a quote and a shrewd potential customer says: “Well, I got a quote for lower than that. Can you do better?” The key is to not tell the salesperson how much lower the quote is (if you got another quote at all- you sly bluffer). What a lot of inexperienced/bad/desperate salespeople will do is to undercut their price without even asking you how much lower the other quotes where.

The other example you see is a lawyer saying: “well, that offer is utterly insulting to my client”… and then not make an counter-offer. They want you to negotiate against yourself and lower your offer without them doing anything.

Now, if you meet a shrewd negotiator, you end up in this strange dance where no one wants to throw out the first number. Then you basically become Job and become super-patient and outwait them or you know you are against a good negotiator and walk away. If you have to make an offer, make sure you do your research carefully.

1 Comment on Effective negotiating strategies: never throw out the first number

By fathersez on December 9, 2008 at 5:16 am

I enjoyed this article. I was going to comment that the less we talk the better our position would be, but I think you said it better.

Be patient and be prepared to walk away. Often it is the inability to do the latter that seals many a fate.