Latest / Sales Leadership with Fexingo: Quota Carriers, Sales Managers, and Revenue Teams / Sales Negotiation: The Power of Anchoring First
Transcript
- Lucas: So, you walk onto a used car lot. The salesman points to a sedan, and before you can even ask, he says, 'This one's fifteen thousand dollars.' No context. No breakdown. Just the number. Luna: And you immediately think, 'That's too high,' but you also kind of start negotiating from that number, don't you? Lucas: Exactly. That's anchoring in action. The first number sets a mental reference point, and everything after that is a comparison. It's one of the most powerful tools in sales negotiation, and most of us don't even realize we're using it. Luna: I've read that even when the anchor is obviously ridiculous, it still pulls the final number toward it. Is that true? Lucas: Absolutely. Kahneman and Tversky did a famous experiment where they spun a wheel of fortune — it landed on either 10 or 65 — and then asked people what percentage of UN nations are African. People who saw 10 guessed around 25 percent. People who saw 65 guessed around 45 percent. The anchor was completely random, and it still shifted their estimates by 20 percentage points. Luna: So if I'm selling a software solution worth fifty thousand dollars and I open with seventy-five thousand, I've already changed the game? Lucas: You have. The prospect might counter at sixty thousand, and you can meet at sixty-two. That's twelve thousand more than if you had started at fifty and they countered at forty-five. The anchor dictates the range of acceptable outcomes. Luna: But what if the prospect is a procurement pro who knows this tactic? They'll just ignore your anchor, right? Lucas: That's the counterintuitive part. Research shows that even experienced negotiators are influenced by anchors, even when they know the anchor is arbitrary. It's not a conscious choice — it's how our brains process numbers. The first number becomes the reference, and adjusting away from it requires mental effort. Most people don't adjust enough. Luna: So the takeaway is, always anchor first? Or at least anchor high? Lucas: Generally, yes. But there's a nuance. If you anchor too high, you risk offending the prospect or losing credibility. A study by the University of California found that anchors that are plausible — not extreme — yield the best outcomes. For a product worth fifty thousand, opening at sixty-five to seventy is aggressive but believable. Opening at a hundred and fifty makes you look like you're not serious. Luna: I've seen that play out in enterprise deals. A vendor quoted three times the market rate, and the buyer just walked away. They didn't even counter. Lucas: Right. So the art is finding that sweet spot where the anchor is high enough to stretch the range but not so high that it breaks the conversation. And here's a related tactic I love: if the prospect anchors low on you, don't counter with a number at all. Instead, ask a question about value. Luna: Like what? Give me an example. Lucas: Say they say, 'We can only budget thirty thousand for this.' You could say, 'I understand that's your budget. Help me understand what's driving that number. Is it a constraint, or is that what you think the solution is worth?' That reframes the conversation away from price and toward value. You're challenging the anchor without offering a new one. Luna: That's smart. It also buys you time to build more value before you put a number on the table. Lucas: Exactly. Because once you give a number, that becomes the new anchor. You want to delay that until you've demonstrated enough value to justify a higher price. Luna: You know, this conversation reminds me of something. If you've found these negotiation insights valuable — maybe they've helped you close a deal or prepare for a tough conversation — we want to keep this show ad-free and accessible. A small way to support is at buy me a coffee dot com slash fexingo. It's not required, but it helps us keep digging into topics like this. Lucas: Yeah, and we really appreciate it. Now, back to anchoring — let's talk about a specific case. I was reading about a SaaS company that used anchoring in their first meeting. Their standard package was $20,000 per year, but they started the conversation by saying, 'Most of our customers find that our premium package at $35,000 delivers the best ROI.' The prospect immediately asked, 'What do you get for $20,000?' They had successfully anchored high and then offered a lower tier that felt like a deal. Luna: So they used a decoy anchor. That's a classic pricing strategy. But does it work in every sales context? Lucas: Not every. It works best when you have multiple tiers and the prospect can compare them. If you're selling a single product with no variation, anchoring is more straightforward — you just set the price high and negotiate down. But with tiers, you're using the premium option to make the mid-tier look reasonable. Luna: I've also heard of 'price anchoring' in job offers. A candidate who asks for $120,000 when the range is $100,000 to $110,000 might end up at $115,000, whereas if they'd asked for $100,000, they'd get $100,000. Lucas: That's a perfect example. And it's not just salary — it's bonuses, equity, start dates. Anchoring works because of what Kahneman calls 'the system one brain' — it's fast, automatic, and easily influenced. We think we're being rational, but we're really just adjusting from the first number we hear. Luna: So what about the other side? If you're a buyer, how do you defend against anchoring? Lucas: The best defense is to ignore the anchor entirely. Before you hear their number, do your own research and set your own internal anchor. Write it down. Then, when they throw out a number, compare it to your own anchor, not theirs. Also, you can counter with a question about their rationale, like I said earlier. That disrupts the anchoring effect. Luna: There's also a technique called 'pre-mortem anchoring,' where you imagine the deal fails and work backward to see if the anchor was the cause. I've used that in my own negotiations. Lucas: That's a great tool. And let's be clear: anchoring is not manipulation. It's a cognitive reality. Every negotiation has a first number. If it's not yours, it's theirs. So you might as well be the one setting the reference point. Luna: I want to bring up a study from Harvard Business School. They looked at real estate transactions and found that houses listed at a higher price relative to the market sold for more, even after controlling for quality. The initial listing price anchored the entire negotiation. Lucas: Right. And the effect was significant — about 10 to 20 percent more than similar houses listed lower. That's the power of a strong anchor. But here's the catch: if you anchor too high and the house sits on the market for months, the anchor loses its power. Time erodes the effect because people start to think something's wrong. Luna: So anchoring has a shelf life. In sales, that means you need to close the deal while the anchor is still fresh. Lucas: Exactly. That's why urgency in negotiations matters. If you let too much time pass, the prospect might do more research, talk to competitors, or simply forget the anchor. You want to capitalize on that initial reference point. Luna: Let's talk about a practical script. How would you anchor in a first sales call? Lucas: I'd start with a range. Say, 'Our typical engagement ranges from $50,000 to $80,000, depending on the scope. Based on what you've shared, I think we'd land around $65,000.' That gives them a high anchor in the upper part of the range, but it feels collaborative because you're offering a middle figure. It's not a take it or leave it — it's an invitation to negotiate. Luna: And if they come back with $45,000, you can say, 'That's below our typical range. Let me see what we can do.' Then you can come back with $55,000, which is still above your original target. Lucas: Exactly. And that's the beauty of anchoring — it gives you room to give concessions that still land you in a good place. The prospect feels like they won a concession, and you get a better deal. Luna: I think the key takeaway here is that anchoring is inevitable. The question isn't whether to use it — it's whether you'll be the one setting the anchor or responding to it. Lucas: Couldn't agree more. And the best salespeople I know are acutely aware of this. They don't just walk into a negotiation and hope for the best — they have a deliberate anchor strategy. They practice it, they test it, and they adjust based on the prospect's reaction. Luna: So next time you're in a negotiation, whether it's a car, a software deal, or your own salary, remember: the first number matters. Make it count. Lucas: And if you find yourself on the receiving end of a strong anchor, take a breath. Ask a question. Reset your own reference point. Because the deal that gets anchored is the deal that gets closed.