Negotiating Challenge: Who Makes the First Offer?

FlashMBA.com presents:
GOBLINS Tactics
Who Makes the 1st Offer?
Anchors or Altars

Take-Away
Talk first and
you gain power.
Let him talk first,
and you gain information.

Take-Away
Either way, you have to
know what a win looks like
-- and when you should walk
away.

Table of Contents
1. Conventional Wisdom
2. Two Approaches
3. Best Practices
All Rights Reserved. @ Copyright 2016. Property of ATH Partners, LLC.

Who Talks First?
1) Conventional Wisdom

Never Make the First Offer

Never Make the First Offer (?)
• Logic: Always let the other guy make the first
move.
– Gain important information.
– His offer may be better than your best case.
– You learn about his character.
• True – under certain circumstances.
– Carries costs.

Other Popular Wisdom
• Sellers talk first –
Buyers assess in silence.
• The one who asked for
the meeting or the
negotiation makes
the first offer.

Risks of letting
him talk first

Risks of Letting Him Go First (1)
You give up the agenda.
–He is seizing the
high ground.
–He sets the terms,
process, and
variables.
–You are now
negotiating “up hill”.

Risks of Letting Him Go First (2)
• It is VERY unnerving
to make ambitious
demands after he has
set the range with an
aggressive opening.
– This is a real risk for
nervous or reluctant
negotiators.
Shark Warning: Aggressive
negotiators will use this
opportunity to their advantage.

Who Talks First?
2) Two Options

Two Approaches
• Drop Anchor
• Wait at the Altar
• Both require the same information:
–Know what a WIN looks like.
–Set firm limits on when you’ll walk away.

Who Goes First?
Anchors Away Wait at the Altar

Who Goes First?
Anchors away.
Anchoring is the practice of delivering your
opening offer first.
– Sets the psychological range of all future
discussions.
– Allows you to set the agenda with YOUR
variables, process, and conditions.

Who Goes First?
Anchors away.
– If you deliver your best case offer
first, it acts as an ANCHOR.
– It sets the range for all future
conversations and counter-offers.
The catch is –
you have to “drop anchor” first.
It takes confidence, courage and preparation.

Who Goes First?
Waiting at the altar.
Some negotiators prefer to wait for the
other side to give their offer first.
–Supplies them with information.
–The possibility of improving their position
if the offer is higher than they would
make.

Who Goes First?
Waiting at the altar.
• If you don’t know the market
or the counter-party well
you may choose to let him
give the first offer.
• This woks best when you don’t plan on
completing the negotiation at this session.

Who Talks First?
3) Best Practices

Best Practices
• Anchor when it helps – even if it’s difficult.
• Wait at the Altar when you need to qualify the
counterparty or learn more about the
industry.
You always have to know your goals,
your limits, and your agenda.

Best Practices
If you go first:
• Start with an ambitious offer ( example:
20% above your benchmark).
• Prepare & plan in advance so you are
ready for his counter-moves.
• Have a plan for how you will give up
ground. ain his position – until you understand.
– Re-anchor with your own “best case” scenario.

Best Practices
If you make him go first:
• Have him explain his position – until you
understand.
–Get specific and fill in all the gaps.
–Don’t over-share your position until you
know his.
• Re-anchor with your own “best case”
scenario.

Final Word
• If you do let him make the first move – and
you receive information that changes the
nature of the deal – STOP.
– Ask questions, get more facts, and have him
explain his position.
DON’T TALK AND THINK AT THE SAME TIME.

Further Reading
• GOBLINS Tactics: Dropping Anchor
• GOBLINS Tactics: Wait at the Altar
(aka After You)

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Negotiating Challenge: Who Makes the First Offer?

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