The start of the deal: How to pitch your opening offer

The downside: ambitious offers can leave you with nothing

So far, the evidence might sound conclusive: you should always go first and go in hard. However, while making the first move often leads to an advantage, ambitious first offers can come at a heavy price. They increase the risk that you could sour the entire negotiation and walk away with nothing. In 2012, research I conducted with Gillian Ku, Cynthia Wang, and Madan Pillutla found that aggressive first offers are more likely to offend recipients and cause them to walk away. The anchoring benefit of a first move can only materialize if you reach a deal. Push too hard, and there’s no deal to anchor.

It gets worse. In research with Jeremy Yip, we found that expressing anger in negotiations is costly: when a negotiator displays anger, counterparts perceive the negotiator as selfish and prefer to walk away rather than reward selfishness (Yip & Schweinsberg, 2017). Our new experiments demonstrate a complementary, but distinct mechanism. We show that even when anger is not expressed, simply feeling angry, often in response to an ambitious first offer, increases the risk of an impasse.

This explains why, despite the evidence, so many seasoned negotiators say: “Never make the first offer.” They’ve seen deals collapse because someone pushed too hard. Those failures are hard to forget.

How to decide: the First Mover’s Matrix

If it’s not as straightforward as throwing all caution to the wind to make that aggressive first offer, how can you assess when it is sensible to seize the initiative, whether or not to go big, and when it’s best to wait for your counterpart to make the opening gambit? Our research suggests that two factors shape when and how to go first: complexity and stakes. Understanding these factors and their implications should be key to determining your negotiation strategy.

How complex is the negotiation?

Complexity refers to the structure and nature of the proposed deal. Is it a simple, single-issue negotiation (usually price), or is it a nuanced negotiation with multiple interdependent issues that require making trade-offs, such as a contract renewal with a long-term client or a salary increase related to a promotion?

In simple negotiations, the anchoring effects of a first offer are strong, meaning any initial figure inevitably becomes the reference point for the negotiation. If you are only negotiating on price, therefore, presenting the first offer will make a big difference to how the negotiation plays out. It will also heavily influence how your counterpart perceives you, with potential risks and costs to the relationship. Because simple negotiations usually involve only one key factor, such as price, there is limited flexibility to accommodate the other party’s preferences or maintain goodwill. That may not matter. Simple negotiations are more likely (not always) to take place with people you might never see again or care about – think buying a house, a car, or selling your company.

In complex negotiations with more to consider than just the price, the anchoring effects of a first offer weaken because more factors influence the outcome of a deal and how each party views the result. In this context, it becomes less certain whether an ambitious first offer will help you achieve your desired goal. Complex negotiations are also often embedded in a web of relationships: you are more likely to see each other again, and to care about the health of the relationship. The risks to the relationship from making the first move or being too aggressive, therefore, become more significant. For example, think of when you negotiate complex deals with long-term partners where the relationship matters, or with colleagues you will see again the next day, week, and year.

How big are the stakes?

The stakes refer to the consequences and costs of a negotiation impasse or collapse. Say you don’t come to an agreement, what happens next? If an impasse means you’re going bankrupt, the stakes are high. If an impasse means you simply seek out another negotiation partner, you don’t need to worry about it too much. Do you want to maintain a positive relationship beyond this particular negotiation? In long-term relationships, triggering anger and damaging trust by making an aggressive first move won’t just kill this deal; it could harm future negotiations and jeopardize the entire relationship. In these kinds of negotiations, you should tread carefully when it comes to making the first offer, especially if you are considering tabling an ambitious figure.