Negotiating Tip: First Offer Considerations - by John Hamilton
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Lots of challenging questions but few answers that work perfectly in all cases and all circumstances. There are, however, some strategies dealing with this topic that are worthy of consideration.
Strategy 1: Let your opponent make the first offer. It might be a pleasant surprise.
The party making the first offer may make a mistake and communicate terms far more generous than their opponent was ever expecting. This often occurs when someone is out of touch with the value and worth of something.
Strategy 2: Try to be the party who makes the first offer.
That first offer position can become an anchor that sets a bracket. Once communicated, that initial position can be fiercely defending and force an opponent move ever closer to it if they want to reach an agreement.
Strategy 3: Never accept the first offer. Even if you think it's fair.
Accepting an first offer almost always causes one to "leave money on the table". In other words, by rejecting that initial offer and initiating (or continuing) negotiations, better terms can almost always be achieved.
Even if better terms are not possible and that initial offer is accepted later, at least the effort was made and both sides can rest assured that they achieved the best deal possible.
Strategy 4: The position of the first offer strongly impacts the final outcome.
Here's more evidence that one would want to make the first offer. Even aggressive first offers communicate to one's opponent that their early "low ball" expectations will have to be abandoned.
Caution
The factors that influence the outcome of a negotiation are quite numerous and the first offer strategies listed above can have varying degrees of influence. But ignoring their impact is foolish and can be quite costly.
But, good negotiators recognize that developing an appropriate first offer strategy can greatly influence a 'good deal' result.
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