May 19, 2021

Taking a punch

Negotiation academics like to treat bargaining as a rational process. A popularly discussed idea is ZOPA—the Zone of Possible Agreement. That is the space between the lowest offer a seller will accept and the highest offer a buyer will pay. It’s a very rational concept except it doesn’t turn out to be so useful in a real negotiation.

Experienced negotiators often lead with a ridiculous offer, an extreme anchor to knock you off your bearings. If you’re not ready for it, you’ll immediately reach for your best prepared offer and be at a huge disadvantage.

As a well-prepared negotiator who seeks information and gathers it relentlessly, you’re actually going to want your counterpart to name their price first, because you want to see their hand. Welcome the extreme anchor but be careful not to let your emotions in response to it cause you to start bidding against yourself.

In response to the initial offer, you will want to deflect in a way that opens your counterpart up to reveal more information. One way to do this is with a calibrated question like “How am I supposed to accept that?” delivered in a deferential way. Another option is to immediately pivot to non monetary terms and discuss implementation details to avoid being dragged into a situation where you’re haggling.