The suggestion to not give a number first is awful. You may not want to give your previous salary history, but you most certainly do want to give the first number. You should do your research and figure out what the company usually pays for someone of your experience (checkout glassdoor.com or ask around) and state a number that is on the very high end of reasonable. It is always easier to try and stand your ground than fight your way uphill from a low offer.
The only case you might not want to state the first number is if you can't find our what the company typically pays.
a) You really know what you're worth to the person across the table. (In a crazy-hot market, it's hard to get a good handle on this. And if you're mentally constrained by your current salary, negotiated in a down market when you had no experience, it's hard to break free of that. It's also hard to evaluate your own skills as others see them...)
b) You are completely comfortable with asking for, say, 1.5x what you're worth with a straight face;
c) when the person across the table visibly flinches or chuckles or hedges - and they will; books on negotiation explicitly teach you to do this - keeping that straight face and defending the number you just asked for.
So I incline to the opinion that patio11 is giving the right advice for his audience: The kind of people who secretly think of themselves as vastly overpaid and are secretly ashamed of it. I know from painful experience that if you send me into a room and ask me to anchor my own price my natural-born tendency is to tie that anchor around my own foot and then throw it into the Atlantic Ocean.
If that is the case, then shouldn't a large part of the post focus on creating more options? Because if you have five interviews, I bet it is easier to be bold in negotiation than when you have one. Any other advice for the timid(than getting more options) is just beating around the bush imo.
While it's theoretically great to be able to play offers off against each other, in practice it's difficult to get the timing right. Inevitably, the offers arrive out of order and you're going to have to negotiate on behalf of the other employers who will be making you offers.
Moreover, even if there are no other explicit offers on the table at the moment it is in your best interests to teach yourself to imagine them, because opportunity cost is real.
So I think it's a good exercise to get comfortable with negotiating one offer at a time. You need to learn to take a deep breath and realize that there are always more options. Other jobs are out there! Moreover, as patio11 points out, if the other side offers X and you ask for X + Y and they say no, rare is the negotiation that can't be salvaged by falling back to X.
Moreover, as patio11 points out, if the other side offers X and you ask for X + Y and they say no, rare is the negotiation that can't be salvaged by falling back to X.
Yeah sure but already you are in a defensive position the moment you ask for more than they just proposed. It's a universally agreed negotiation tactic to make the first offer.
It's a universally agreed negotiation tactic to make the first offer
Well, your argument was going better before you went this far, because now I'm going to have to ask you to take it up with Roger Dawson, author of the fairly-well-rated Secrets of Power Negotiating, from whom I learned the tactic of never naming the first number.
And, while Dawson is probably exaggerating his status as one of the best negotiators on the planet - because he's got to be prepared in case you negotiate him down ;) - forgive me for betting on him against you.
(Dawson's logic, by the way, is pretty clear: All else being equal, the default pattern of a negotiation is that one side names a number, the other side names a different number, and you compromise somewhere in the middle. And you're the second person you obviously have a big influence on exactly where the "middle" will be. If you want to end up at $125k, and your partner goes first and offers $120k, you know to ask for $130k or $135k, and now things go smoothly... but if you're asked to go first and you name $130k and your partner flinches and then says in a quavering voice that the budget will only stand $70k "but maybe we can make a one-time exception", now the "compromise" point is anchored around $100k and you're going to have to negotiate much more skillfully to claim your remaining $25k.)
Does anyone have a negotiating book to recommend that offers fundamentally different advice from this?
To be fair, shouldn't the first scenario be offering $70k as well? Otherwise it's biased towards the premise that you should say a number second.
In that case, let's say you want $125k, and the company offers $70k before you say how much you want. Well, you're still in a difficult situation to get to $125k. Ask for $180k? That wouldn't fly. (I'd also say that if a company offers $70k for a position that should be around $125k, they're clearly indicating that they're trying to screw you over. So probably not worth pursuing)
That being said, I feel that not giving the first number would be beneficial to me because I might then be offered more than what I would have said. (I think I've been mostly underpaid, so my perception of a fair salary is likely screwed up towards the bottom)
I'm sorry, it probably would make a better argument if I hadn't used the $70k example. It would have been more believable and everyone knows that coders love symmetry.
Except I just couldn't resist, because... truth is stranger than fiction, and I really have been offered 40% less than my desired salary.
(Remember, to a nonprogrammer, programmers look like clerks. When you tell them how much you expect to earn, and they flinch, they may not even be play-acting: Why, for that kind of money they could have hired three clerks! People will generally not hesitate to offer you the median salary for white-collar workers of your age range, either because they're actually clueless or as an opening feint in negotiations; you need to be prepared for that.)
Anyway, now that I've led us here, your scenario: You think you can earn $130k. A company opens with an offer of $70k. Do you really counter with $180k?
Well, maybe you do! If you're negotiating with an experienced software engineer at a mainstream software company, you could certainly try it. The message you'd be sending is I recognize that you have just thrown me an embarrassing lowball, and I know you know how low that ball was, but I'm going to take it in good faith by assuming it was an obvious joke, and play along by lobbing an obvious highball right back at you. You should probably open with a hearty laugh, though, and make your counteroffer with a sly smile and maybe even a wink.
But I, being excessively polite and fairly bad at broad back-slapping humor and pretty much a coward, would probably not do that. Instead I'd play it safe and assume that my counterparty is a babe in the woods - if they've just lowballed you by 45% they're certainly signaling that - and move them up more gently. I'd flinch (Dawson: "always flinch at the first proposal. Practice flinching. A wince, a cough, a pregnant pause, a slight chuckle, but flinch") and say something like "you know, the average starting salary for a Google programmer is far higher than that." Then talk about that for a while.
[EDIT: In my first draft of this I named a number at this point. A number which was lower than my target. A rookie mistake! I really am bad at this. Perhaps it would be better to try and coach them closer to your target number before naming any number of your own.]
But it will be hard to salvage a negotiation that starts so low. Give up and take it as a sign: You'll need to start marketing yourself to a higher class of employer, because you've made a mistake. Either you're ridiculously overestimating your earning potential or you're targeting the wrong market with the wrong message. See: patio11's other essay.
Why would a partner give a $70K counter in one case(when he goes second) and offer you $125K in the other case(when he goes first)?
It seems contrary to my experience. In my experience, you are lowballed when you don't take control and set your price.
Also, if you want $125K, you can either ask for $150K or not budge on $125K(and make it clear that it is non-negotiable beyond $5K) ... the no-budging works great if you have other similar offers. That is how I got my present salary anyway.
You are talking about resetting anchors. While it can happen, generally the first number is a stronger anchor than the second.
>While it can happen, generally the first number is a stronger anchor than the second.
Not so, because the second anchor sets another number the moment it is uttered: the middle ground.
Employers may lowball you if you are forcing them to give a number, so what. If the number is insulting, you suggest that perhaps the interview is a waste of time and leave. Nothing lost. If the number is low but not crazy, you suggest that it is low - and won't be the final number - and carry on, taking this into account when you counter with your "high" number.
If you are asking for $150 and "making it clear that $125 is the minimum" you've effectively lost out on the fact that the employer may have given you >$125, but only as a last resort to losing you completely.
Nope, if you set it at $125K, you walk away from anything lower. That is how I do mine...I leave at most $5K room for negotiation but other than that, I tell them this is the fair salary in my view and they can match it or I walk. And indeed, I'll walk if they can't come pretty darn close to it.
The $150K is if you want to play a more elaborate game. Then you don't say between $125K and $150K. But if they come back with a $130K counter, you take it.
Your max buy price: $10000
Their min sell price: $4500
Used Car Value - Worth probably around $4000.
You: I'll give you $10,000 for that car.
Salesman: Deal.
Translation: You got screwed.
You: I'll give you $5000 for that car.
Salesman: $5000 is a little low, but lets talk about all the other stuff first.
<later>
Salesman: $7000, and is really the best I can do.
You: done.
Translation: you got screwed.
You: I'll give you $2000 for the car.
Salesman: You aren't serious. The car is easily worth $10000. Walks away...
You: Ok, $4000.
Salesman: $7000 is the best I can do.
You: done.
Translation: You got screwed.
In every case where you present the first number, the salesman can use that to frame the debate. Even if you really lowball the number, you allow the salesman to name his price by providing the top number that you can work from. The more outrageous your lowball, the more outrageous his top number. Point being though that you're working towards the number in his best interest, not yours.
Same holds true in salary negotiations. Never, ever say your number first, unless you are perfectly happy conceding on it for some other point.
Your examples are flawed because you are coming up with a number out of your ass. The idea is to gauge the used car value and then make an offer lower than that. In the first case, you wouldn't offer $10,000, you'd offer $3,800.
Funny enough, this is the method my Dad uses to buy cars and it works almost every time. But it requires that you understand the lowest number the guy can go without taking a hit. Once you know that number, go a little lower and tell him that the day he can sell at that number, he has your business. After my dad has done the research, he explicitly tells them they do not need to sell him the car as a salesman - he knows what he wants and for how much. The day the salesman is ready to sell for the amount specified, he should call my dad. They do. Every single time.
>But it requires that you understand the lowest number the guy can go without taking a hit.
I don't give a damn if he takes a hit or not. His profitability is his problem, not mine. Ideally, he takes a loss on the car he sells me because that sale pushes him over some target that actually works for him. Only he knows his position explicitly. I can never know this. Assuming I can is putting me in a loser's position.
Generally, if a car salesman isn't pissed off at you following the sale, you are getting ripped off. I hate to tell you this, but it is true. If the car salesman is "happy" to sell to your dad, it's probably because he's an easy sell. That's not negotiation.
The first case is only an example, but your $3800 offer is pretty close to my example where you offer $2000. The error you're making is that $4500 is some sort of set in stone value. It isn't. The car might in fact be worth more than $10K to you, and less than $1K to the dealership.
The art of negotiation is the act of getting the car for the lowest possible price, regardless of its worth to you or the seller.
Generally, if a car salesman isn't pissed off at you following the sale, you are getting ripped off.
Yep, they are usually pretty pissed at my Dad.
Ideally, he takes a loss on the car he sells me
He is not really taking a loss if he's meeting a target that net makes him a profit(in some manner). You seem to argue that you can't extract such information. I'm arguing that you can.
The point is he might be making a loss to the business for some other goal (e.g. making a quarterly number that his boss will reward him for, costing the business even more), so making assumptions based on the value of the expected average market value of the car has a decent chance of setting the value higher than the value of the car to that salesman at that point in time.
But how does this dialog progress if the salesman gives the number first? I can't envision a scenario other than them offering $10,000 at which point we're back in your final scenario there.
I was once in a situation where two companies were interested in hiring me, and when the hiring manager for one of them found out I had nibbles from elsewhere, he said he didn’t want to make me an offer until I was absolutely sure that his company was the place I really wanted to work for.
Translation: “I don’t want to get caught in a bidding war for you.”
I went with the other company, which was, in fact, the place I really wanted to work for.
I found the book made me uncomfortable, in sort of the same way I feel when I'm watching a masterfully-made infomercial. This, to me, is a sign that it was working. ;) If the sport of negotiating was as natural as breathing for me I wouldn't be reading a book about it!
Winning Through Intimidation was a fun read, especially if you're into real estate. Apparently the book is worth a lot now (I had no idea, I have an old hardcover version that I don't even see here)
I was reading "Bargaining for Advantage" this weekend after reading another recent salary post and also recently re-negotiating my salary. I really like the book because it kind of sets down a clear set of steps and vocabulary to refer to them, and because it emphasizes information and assessment of the situation rather than psychology.
I was voted as the most ruthless negotiator in class because as soon as the negotiation began, I rushed to anchor the most extreme position. The rest of the negotiation was how I might budge a little bit. In all but one case, the party budged and I got a super awesome deal--and the points. In one situation, the party didn't budge and neither of us earned any points.
It all really boils down to options and what is at stake. In my class negotiation, I literally had nothing at stake(the grade wasn't tied to winning negotiations). In real life though, if you don't have options and you only have one offer and you are pretty sure you won't get any more, this is harder to execute. On the other hand, if you don't have a lot to lose, you can be somewhat irrational.
Note, you are not giving your current salary number, just what you expect.
If it is way overboard, the company should still make you an offer if they like you. From then on, it is up to you: if you have a better option, go with it; if you don't, emphasize that you are willing to find some middle ground because you dig something unique about the company. You can say how you understand they can't pay what you'd like but because you are excited about industry x and enjoyed the culture, you'd consider middle ground figure of _____.
Final caveat: There is such as thing getting TOO good of a deal ... and then getting fired soon after because you couldn't deliver on the expectations you set relative to your salary.
Scientific research agrees with you. The concept is called anchoring
Anchoring research helps clarify the question of whether to make the first offer in a negotiation: by making the first offer, you will anchor the negotiation in your favor. In fact, Mussweiler and I have shown that making the first offer affords a bargaining advantage. In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.
I was under the impression that putting out the first number anchors the negotiation around that number, not necessarily in one's favor. For example, if you think you want to earn 100k, and they were hoping to keep you under 125k, throwing out a number of $110k is not giving you the advantage, as they may have thrown out a first number of $115k if you had let them.
This is more reason to research the company's salaries up front. If they were planning to lowball you and you put out a high number, it may help you, but if you don't know anything about the company, it may be more beneficial to let them make the first move (unless you have multiple options open and are willing to say a high number).
the problem is that salaries aren't uniform for all companies.
so if you go by glassdoor, you'll see that some engineers make $40K/yr, while others make $150K/yr in the same area.
If you go by listed salaries on job descriptoins, once again on monster.com you might see jobs posted at $100-150K/yr...while others, for pretty much the same exact requirement list/job description you'll see $50K
The good thing though, is that if you ask for more than they can afford, they'll almost always tell you their real number. So just ask for 1/3 more, i.e. if you want 90K, ask for $120K, then watch them come up with a 100-110K counter offer....and who knows, you might just get that $120K
In fact VMG's HBS link, which generally encourages making the first offer, includes this caveat:
> There is one situation in which making the first offer is not to your advantage: when the other side has much more information than you do about the item to be negotiated or about the relevant market or industry. For example, recruiters and employers typically have more information than job candidates do...
If I can get to the point where I understand the market as well or better than the potential hirer, I'll try to make an anchoring first offer. Usually I can't.
It still makes sense to accept an offer (even if you could be getting screwed), if that offer remains substantially better than what you're currently receiving.
Considering that anchoring works with completely unrelated numbers, I wonder how well it would work to ask the population of Tallahassee, or the distance in miles to the moon, right before you start talking dollars.
The only case you might not want to state the first number is if you can't find our what the company typically pays.