Should I Make the First Offer in a Negotiation?
Before showing people how to negotiate in the boardroom, I negotiated in the courtroom. Check out my “Linda the Lawyer” photo above where I’m 29, a new law partner and a month before being a mother (hence the strategically placed book.)
As a lawyer and as a mediator, nothing was more frustrating than waiting for one party to make a first offer. Often they silently sat in a staring contest waiting for the other person to start.
What a tremendous waste of time!
Negotiations couldn’t begin until someone was brave enough to ask for something … anything … to get the conversation moving.
There are two schools of thought on whether you should make a first offer.
The “Always Make the First Offer” Approach
Some negotiators always make the first move. They throw out a number (or solution) which is very different than the other side anticipates. By placing this “stake in the ground” they hope the other party questions his or her own evaluation and begins bargaining nearer this new offer.
When you feel forced to make a first offer, consider using a trial balloon to determine the party’s real position. For instance, suggest a price or idea you believe he or she will reject immediately. Possible results are:
The party may surprisingly accept the deal (not likely – but occasionally you get a gift.)
He or she will laugh or say, “Nice try. What do you want, really?”
The party might give an angry or exasperated response, “You’ll not get that in a million years.” However, you are now in a better position to counter offer by saying, “You asked what I wanted. What did you have in mind?” or “OK. What do you think is fair?”
The “One Who Speaks First Loses” Approach
Other negotiators wait to make the person uncomfortable or until the other party reveals more information. Going last offers two potential benefits.
One, if a person’s initial offer is much higher or lower than you anticipated, you may need to educate the other party or rethink your counter offer.
Two, you could receive a very pleasant surprise. The other party gives you a much better opening position than you anticipate. But be careful! If you immediately accept the better than expected first offer, then…
The other party may realize he or she made a bad deal. If someone feels taken advantage of, he or she can start focusing on breaking the agreement or even sabotaging the deal to get revenge.
You may need to analyze if the deal is really that “great” and determine what the other side actually expects from you.
You could be leaving money on the table. Initial offers aren’t always the best. Often, people hold funds or options back as bartering chips.
The secret to negotiation is to remain cool, calm and in control. Good negotiators don’t care who makes the first offer. They aren’t flustered by another’s strategy as long as they are satisfied by the final outcome. Plan for both scenarios, ask great questions and remember your bottom line.
About Linda: A recognized authority on negotiations, workplace issues and strategic communication, Linda Byars Swindling, JD, CSP is an author, media expert, a “recovering” employment attorney, and a professional speaker.