
Make the First Offer in a Negotiation - andyanderson
http://www.inc.com/drake-baer/why-you-should-always-make-first-offer-in-negotiation.html?cid=sf01001
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akavi
It seems to me that making the first offer is sort of an "advanced technique".
Ie, it's probably optimal, but you have to be decently skilled at negotiation
to pull it off.

I think the reason "Let them make the first offer" is such common advice is
because most people, when faced with the prospect of choosing a number,
usually go too low, perhaps out of discomfort with appearing arrogant or for
fear of losing an offer entirely. The former's probably the bigger concern for
engineers, given how notoriously bad at appropriately valuing their own skills
they are. The latter is rare in tech, but is occasionally a legitimate concern
for other fields with worse job markets.

Also, generally speaking the hiring party is at a strong advantage by virtue
of both information (They know how much they're paying other people, and how
much they've offered to people who've turned them down) and practice (They've
carried out salary negotiations dozens of times before, while the potential
employee has probably done it at most a handful of times.).

Given that, it's probably safer to let the other party open the field, and
hopefully negotiate up from there.

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stormbrew
> I think the reason "Let them make the first offer" is such common advice is
> because most people, when faced with the prospect of choosing a number,
> usually go too low, perhaps out of discomfort with appearing arrogant or for
> fear of losing an offer entirely. The former's probably the bigger concern
> for engineers, given how notoriously bad at appropriately valuing their own
> skills they are. The latter is rare in tech, but is occasionally a
> legitimate concern for other fields with worse job markets.

I don't think it's really unique to tech. The information asymmetry you
describe below is more than enough reason for this to apply to nearly any
prospect in any field, and it applies doubly in situations where the pay is
generally low to begin with (eg. shiftwork).

Only the most exceptionally informed prospects will be able to make an opening
offer that won't stand a good chance of getting them shafted.

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blacksqr
Nazareth College revoked a job offer when a candidate tried negotiating:
[http://www.slate.com/articles/life/education/2014/03/nazaret...](http://www.slate.com/articles/life/education/2014/03/nazareth_college_revoked_a_job_offer_when_a_candidate_tried_to_negotiate.html)

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TheCoelacanth
4 of the 5 things she requested were things that would result in her doing
less teaching. That's a pretty big red flag when the job she was offered was
primarily focused on teaching.

If a software developer tried to negotiate that no more than 50% of their time
would be spent developing software, they would probably also get some offers
rescinded.

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tokenadult
A book I read about negotiation some years ago included the principle "shock
'em with your first offer." In other words, make the first offer (which you
should be the one bringing up) so favorable to you in its terms that you nudge
the other party into budging from their position closer to yours. It's worth a
try.

~~~
seanlinehan
If you are going to attempt to use this tactic, the most important thing to
consider is that your offer must be within the _range of reasonableness_.
"Shock 'em with your first offer" is a good sound-bite, but make sure not to
actually shock them. If the number that you propose is outside the range of
reasonableness, an experienced negotiator will "wipe it off the table" and re-
anchor.

For example, if you are negotiating your salary for a first-time software
engineering gig and open with $500k, the other side is likely to say something
like, "There is absolutely no way we can do that. We would like to offer you
$75k." If you're offer gets wiped off the table, your anchor has absolutely no
power in the negotiation.

So go high (or low, if you're on the other side of the table), but don't be
too extreme.

~~~
kosei
There's also the potential that the offer gets pulled because they realize
you're not a good fit based on the large salary range discrepancy. If I'm
hiring for someone at $50K and they're asking for $150K, I know that there's a
good chance the employee will end up being unhappy financially and looking for
another job anyway if we compromise closer to $75K.

~~~
chavesn
You never know for sure, but I believe this happened to me. I had a follow up
call with HR about why they weren't continuing with me despite what felt like
a good "getting to know you" introduction interview.

The gist of the answer was "we feel that you are in range of [some job
level/position] but only the very senior people in that department are paid in
the range you mentioned as your requirement."

So they decided not to spend any more time with me because of the mismatch of
salary and their perception of my experience level so far.

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ufmace
Interesting perspective. The biggest negotiation point for most people is the
job offer, and the usual advice for that is to, as an applicant, never give
them a number first. Perhaps the more important points are:

1\. Never give them any of your previous salaries, as this may anchor you to a
much lower price than they are willing to pay for your talents

2\. Never negotiate salary before they have conditionally agreed that they
want to hire you, as this is when their perceived value of you is the highest.
If you start negotiating before this point, their value of you will be lower,
and you'll have to either refuse to go down and have to break off the whole
thing, or anchor yourself to a lower number than your talents are really
worth.

On top of that, giving them a number first is usually not to your advantage,
as you probably have less information about what the market is really like and
what they are really willing to pay for you, but this is a weaker point than
the above two. It could go the other way in some situations, especially if you
have some sort of rare, special skill or connection above and beyond the
typical salaried employee.

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fecak
Job seekers who throw out ridiculous numbers as a starting point lose
credibility and find themselves backpedalling to try and regain that
credibility farther into negotiations (if negotiations even continue). In my
career I've seen candidates do this enough that it bears mentioning when we
are about to enter negotiations, particularly with younger candidates who
haven't held many jobs.

The anchoring concept is somewhat skewed when you are asked to provide current
comp info. Most of my clients (recruiter) require me to provide prior info.
The current comp info provides an anchor right away, and any accompanying
information with the current comp will be the true anchor. So saying
"Candidate is currently earning 120 and will entertain offers above 135." The
client now knows where the bidding starts, so any offer below that won't be
considered.

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mathogre
I was looking at changing companies many years ago, from a large company to a
small company. With the large company, I had lots of benefits that I would
lose by going to the small company. Regardless, the small company was
attractive. I also had the advantage I didn't need to change jobs.

When the vp of the company asked what I wanted, I gave him a figure that got
his attention. He remarked it was beyond what they could do. I responded that
the amount I was asking essentially covered the benefits they didn't give.
When they finally made an offer, it was almost exactly what I requested.

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anishkothari
Except if the person you're negotiating with is willing to pay more than your
initial offer. then they would happily pay you less than what they expected to

~~~
CapitalistCartr
Wall Street has an expression: "Bears make money; Bulls make money; Pigs get
slaughtered." Its OK to leave a little money on the table.

If I'm willing, even happy to take the job as described for 100k, that I might
have pushed him up to 125k is probably not relevant. Other factors in the job
will be more important by that point.

~~~
notahacker
Sure, a successful negotiation almost invariably results in a situation where
they'd have been willing to offer even more if they needed to, and you'd have
been quite willing to accept less.

But rushing to be first put an offer on the table that is lower than the offer
they were about to make you is almost[1] invariably stupid. And at the risk of
stating the obvious, most contract negotiation isn't like employment in that
pretty much _all_ the party paying the fee is offering is the cash.

[1]the exception being where there's a good chance that appearing to be "fair"
or "cheap" will help you get a better offer in future, or prevent you from
being gazumped at the last minute.

~~~
loganu
Where is that exception that appearing "fair" or "cheap" helps you? If there's
another candidate equally qualified and liked by the company, they company
will hire the cheaper one - but as a candidate, you shouldn't bank on this
situation happening. If you were hired as a "cheap" employee, when a new
position or opportunity comes up, you would have to negotiate yourself up to
your fair-market value and then some in order to get that better offer. Better
to start high and work higher than come-from-behind with a low price anchoring
your value.

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trjordan
Well ... kind of.

"'My own research suggests that first offers should be quite aggressive but
not absurdly so', Galinsky says."

Make the first offer, but only if you're pretty sure you know at least as much
as the other side about what's reasonable. If you're not in the right
ballpark, an absurd offer gives the other side the right to sandbag, knowing
that you don't really understand the playing field.

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programminggeek
If you are buying or selling, understanding the market price for what you've
got will let you know if you're making the right deal or not.

Job offer negotiations sort of suck in this regard because you often don't
know the market price, and if you set your number too low in your head, you're
pretty much stuck starting off lower than you should and that can impact your
entire career.

You might think you're doing good negotiating, but the guy next to you might
be making 10-25k more a year just because they started at a higher number.
It's weird but true.

Same applies to buying or selling just about anything. Have as much data going
in as you can about what is normal, fair, etc. and compare that to what you
want.

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erikb
Happy to see someone support this approach. I think both approaches have their
valid context. If you know a lot about the negotiated value then making the
first offer is great because you can anchor the bargaining. But if you don't
know then it's better to wait for another offer and get yourself anchored,
because your own assumptions might be way off the scale and of course if you
know less about the topic than your negotiation partner then of course you
need to pay a little extra at some point anyway.

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mhofer
If you are unable to make the first offer because the other party is quicker:
\- Smile, even laugh, and state your counter anchor clearly \- Never mention
or repeat the other's anchor

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jakejake
I would only want to start with an opening price if I was fairly certain what
the offer range would be. Without that info you may just hard-bargain yourself
a lower salary. If you ask for something that is totally out of line with the
expected range then you do risk an employer writing you off as too expensive.
In my experience though, if an employer wants you and you ask for too much -
they'll usually at least tell you what their upper limit is and give you a
chance to consider it.

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smallegan
"A good negotiation is one where both parties walk away equally unhappy" \- I
can't find who first said this but if you know please attribute appropriately!

~~~
jakejake
I know both Woody Allen and Larry David have used that line. I doubt either of
them were the original, but still it's a good line!

