This Simple Negotiating Trick Puts Money in Your Pocket
When you hear the word "anchoring," what comes to mind? No doubt something that involves a ship dropping anchor, or perhaps fixing something to a wall or floor. But it's also a known technique used in sales and negotiations that helps people get what they want.
The basic premise is not unlike that ship dropping its anchor, only instead of keeping the vessel in one place, it keeps your mind there. Whether it's a price, a salary, a sale, or a goal, this technique anchors your mind at a certain level. Then, all decision-making is based on that first piece of information you were given.
Let's take a look at how it can be used to help you get what you want, save money, and even achieve a lot more around the house.
Negotiate a Bigger Raise or Starting Salary
Many people foolishly wait for the other person to make the first move when it comes to salary negotiations. The thinking here is that you don't want to show any of your cards too soon. Well, that's the complete opposite of what you should actually do. Using the anchoring technique, you can choose a salary that sets the starting point for the negotiations.
If you're an employer, throw out a figure that is way too low. If you're an employee, raise the bar higher than you'd expect to hit. If you ask for a $180,000 salary, and the actual salary on offer is $120,000, you may actually get a little more than what they originally intended to pay. It's much harder to come down to $120k from $180k than it is from $130k. Similarly, giving an employee an offer of $70,000 for a job you'd be willing to pay $120,000 is just as effective.
Sell a Product or Service for More Money
You don't have to be in a big business to use this effectively. It can work online, at a market stall, or even a garage sale. Here, you will use anchoring as a comparison tool.
For instance, let's say you're selling vinyl records, which are very popular these days. Set a few vinyls on the table and mark them way above the price you actually want. Then, further back, put a larger selection of vinyls set at a price slightly above what you would like, but much lower than the other, more expensive records. When the patron comes to peruse the stock, they'll initially get sticker shock. But then, they see a vast drop off. That initial price of $20 per vinyl just dropped to $8. These $8 vinyls seem like a bargain. However, if they had all been marked at $8, or some cheaper ones had been placed first, that initial anchor price would have set the standard. Try it out. You'll be amazed at the results.
Get More Done at Home or at Work
If you're having trouble getting all of your tasks done, either at home or at the office, you can use anchoring as a way to be more productive. In this case, it can be overwhelming to have 20 different things to do when you get home. You are anchored to a task list so large that you simply don't do any of them.
Instead of 20, anchor yourself at a more manageable number. How about five? Divide those 20 tasks into five groups of four, and attack them that way. For example, instead of organizing the fridge, doing the dishes, cleaning the stove, and wiping the counters, your task instead becomes "clean the kitchen." By grouping your activities, and creating a smaller list of tasks, you are anchoring yourself at a much more achievable goal. At the office, it's the same thing. Don't give yourself a massive list of tasks. Instead, divide and conquer.
Get a Better Price on a Car or a House
Car dealerships use anchoring all the time to get you to pay more for a vehicle. The sticker says $18,000, but in reality, they're willing to go as low as $13,000; they just never tell you that. It's time to turn the tables on them.
When you go into the dealership, never tell them what you are prepared to pay for the car. Instead, set your price way lower. If you're ready to spend $20,000, tell them the most you can pay is $15,000. It's your hard stop. No more. The salesperson will now be anchored at that lower price, and will do whatever he or she can to get you to go past it by a few thousand dollars. This is good news for you, because in reality, you're going to spend a few thousand less than you actually wanted to pay. (See also: 17 Things Car Salesmen Don't Want You to Know)
The same goes for buying a house. Your initial offer should be low. Not low enough to price yourself out of a bidding war, but low enough to set the expectations of the seller. And as an aside, if you're selling the home, go high. When you list the home at $300,000 and sell it for $280,000, the buyer thinks they saved $20,000. However, you may well have wanted $270,000 for the house. You just made an extra $10,000 and the buyer is happy with the deal.
Use Your Knowledge of Anchoring to Beat the Sales Staff
Whether you're buying a car, a bag of apples, a new set of wireless headphones, or a few books, anchoring will often come into play. Trained sales staff know how to use anchoring to get what they want. But, if you're prepared, you can become "anchorproof" and pay less. Here are a few techniques at your disposal.
First, you can simply ignore their anchor, especially if it's ridiculously high or low. Now, you don't want to say "No way," as this halts the process. Instead, use language like "I see, that's not quite what I had in mind, let's look at this at a different way and find something we can both be comfortable with."
If you don't want to do that, try an anchor that negates theirs. For example, at a car dealership, when the salesperson gives you the old "We can take $3,000 off this car," you can reply "Wow, that still puts it $3,000 above my maximum price."
You can also deflect an anchor by offering one from a different company. At that same dealership, you can say "That's a great discount, but it's still $2,000 more than the same vehicle on offer at ABC Dealership." Of course, to do this you have to have done your research. Make sure you know exactly what the prices are at competitors, and be ready to back it up.
So, armed with all of this, you should now be ready to use anchoring to make and earn more money, and save money every time you have to negotiate a price. Go get 'em.
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