How to Use Anchoring Techniques to Your Advantage in Negotiations

Anchoring is a negotiation technique that takes advantage of human nature to compare things and assess them more objectively. To implement anchoring successfully, begin the conversation with an offer that’s either high or low and ensure that any subsequent offers are evaluated against this initial offer.

Anchoring can help sales reps in various ways, but they must remain aware of its pitfalls.

1. Make Your Offer First

Anchoring works best when the initial offer comes from you; this enables you to choose an initial price that reflects your negotiation goals. However, if letting the buyer initiate first offers instead, it is critical that their anchoring bias be managed effectively.

To do this successfully, make your initial offer just outside the buyer’s reservation price – this will provide some room to maneuver if they counter-offer at a higher amount. Furthermore, be able to justify your anchor with logic and facts, showing that you possess an in-depth knowledge of how your product or service meets buyer needs.

When buyers make offers with high starting points, you can deflect them by quickly making your own counter-anchor offer to establish a new starting point that aligns more closely with your own position and shift negotiations in your favor.

Be wary of becoming too attached to your anchor position as this could lead you down a path toward inflexibility and rigidity in negotiations. Negotiation is an ever-evolving process and you should remain flexible to take advantage of opportunities as they arise during discussions; doing so will show both buyers that you’re willing to find solutions that benefit both parties involved.

2. Don’t Be Afraid to Walk Away

While preparation for negotiations is key, knowing your walkaway point can also be just as essential. If the prospect has an anchor that precludes reaching the agreement you need to reach, then your time may be better spent walking away from this discussion altogether.

At the outset of any negotiation process, it’s helpful to identify who will make the first offer; this helps avoid getting bogged down into an unfair starting point. If it’s the prospect who starts negotiations, try offering something as close to your ideal number as possible and if they reject it make another smaller offer closer to it – this can disarm them and avoid them feeling obliged to reciprocate by giving in to your requests.

Rejecting demands that are unreasonable can be challenging, especially when your goal is to make someone else happy. But, if their understanding of success, love, monogamy, honesty and respect does not align with your relational values and moral code then be bold enough to say, “thanks, but no thanks”. Leave the negotiation early before it escalates into an argument that makes you uncomfortable – this way your strong character will remain remembered by future prospects as someone who knows her value despite any future contracts with this prospect.

3. Don’t Be Too Focused on Anchoring

Anchoring is an effective negotiation technique, but be careful not to become overly focused on using anchoring techniques as doing so could cause you to miss other opportunities during negotiations.

As an example, if your offer is too high, your prospect could perceive that you are overstating its value and opt out. Conversely, if it’s too low they might think you are undervaluing it and become even more rigid with their pricing position.

As noted above, when anchoring an offer first you risk becoming distracted by your personal biases and creating an unfair starting point. A better approach would be letting the other party make their initial offer first as this will allow you to stay more flexible throughout negotiations and not get so attached to one number.

Cialdini describes another effective strategy as “rejection-then-retreat.” This tactic involves making an initial large ask and then immediately making one that’s smaller to disarm and keep their attention focused on you instead of whatever number they were originally attached to.

4. Be Flexible

Anchoring can be an effective negotiation strategy when used correctly; however, mistakes that undermine it are easy to make and can have serious repercussions for your position. For instance, throwing out an unreasonable or arrogant price point could leave them thinking you’re unwilling or unable to negotiate and compromise; leading them to reject the deal outright.

As part of your research and knowledge of the other party, it is vital that you use this knowledge to decide how high or low to set an initial offer. When making this initial offer, be sure to take into account both their expectations as well as your understanding of value for what you’re selling or buying and the size of a potential zone of possible agreement (ZOPA) before making the first proposal.

Anchoring works by first offering the higher offer and then switching to the lower one, thus narrowing their expectations and giving you more power in negotiations.

To get the most out of your negotiations, it’s essential that you remain open-minded and flexible. By practicing counter anchor negotiating techniques, you can increase your odds of making successful business deals in the future. Take risks, accept losses and learn from them – soon enough you will become an adept negotiator!