In my negotiation skills workshop I get lots of questions and a common one is “should you make the first offer?”

In reply to this I tell them the story of my mother and the Portuguese tablecloth salesman.

Many years ago now, we were on holiday sitting outside when we were approached by a smart looking Portuguese man in a white suit selling a selection of lovely hand made table cloths.  My mother asked him the price to which he responded 2000 escudos (it was a long time ago!).

After much haggling my mother managed to buy the table cloth for 1,500 escudos and was very pleased with her negotiating skills until she saw the same table cloth for sale for 1,000 escudos in a shop the next day.

The salesman had successfully used his understanding of the psychological principle of “anchoring” in that the other negotiating party will often change their perception of what is a good deal solely based on the other side’s first offer.

Clearly if my mother had wanted to save money she should have done some research on the price of Portuguese table cloths and having done so ignored any first offer from the salesman which was just that an offer.

Next time you are in a negotiation think could I benefit from anchoring by making the first offer or if the other party makes the first offer be sure to ignore it and just focus on what you are prepared to pay.

If you want to read about the psychological research on anchoring read Thinking, fast and slow by Kahneman, D (2011) or take a look at this research article by Galinsky, A.D. and Mussweiler, T. (2001)

Posted by Neil Park January 31, 2016