how to use anchoring to your advantage when negotiating

ANCHORINGHOW TO USE

TO YOUR ADVANTAGE WHEN NEGOTIATING

Making the first offer in a negotiation acts like an anchor

Both parties will rely on "the anchor" when

making decisions

When you have insufficient information about your buyer's willingness to pay - let them go first

And use these tactics to protect yourself from the worst effects of a buyer's

anchor

Tactic: Ignore the Anchor1

When confronted with an aggressive opening position…

…deflect it and don't respond directly by suggesting you either agree or disagree

For example: “… I think we may be looking at this contract renewal in very different

ways. Let’s try and find some common ground by discussing…..”

Tactic: Counter-Anchor2

You can also counter offer to offset the anchoring effect of the buyer’s first offer

For example: “Ten percent discount? Actually, we just implemented a five percent price increase on all contract renewals based on our increased costs…”

Tactic: Separate Leverage from Information3

When the buyer tells you what they want (information) and why you should accept it (leverage)…

Focus on how to best differentiate your offering from the

competition

For example: Buyer: “XYZ Corp has offered the same thing for 20% less.” You: “I am not sure what it is you are asking for...” or “ What commitment have you made to XYZ Corp?”

Tactic: Clarity4

Respond to a buyer’s attempt to anchor by asking clarifying questions, rather than counter-anchoring

Probe for more information regarding the buyer’s position and the motivations behind it

Develop creative options that you can offer later in the discussions

Don’t dwell on the buyer’s anchor, and change the

subject to regain control of the negotiation

Tactic: Reject the Anchor5

If the buyer’s position is

so extreme

that it’s too far outside your

planned positions…

Be prepared to reject their opening position

as not even a basis to negotiate

Back up your position

with one or two reasons…

…then propose what would be an acceptable

basis to negotiate (Counter-Anchor)

Preparation and research is

essential to determine

when to make the first offer

And remember that you must

first understand your buyer’s

willingness to pay.

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By David Jacoby

@DiJacoby