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Opening Offer Operation: You First! No, I first

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04/16/2012 04:25 PM

It's time to dance!  Nice truffle shuffle, though I meant get the negotiation started.  Last time we spoke of the basic negotiation zones: Insult, Credible, Reasonable, and Zone of Agreement.  So to begin discussing how to land in the zones and use anchors, let's start by talking about what I call the the Opening Offer Operation or the "OOO".

I mentioned this in a previous entry: an oft recommended strategy is to NOT make the opening offer.  Why?  The basic philosophy is that the party that makes the opening offer is at a disadvantage because they have revealed their negotiation expectations and revealed information about where they are likely to settle at.  Remember Joe and Betty; if Joe is willing to pay $3 for a candybar and Betty opens at $2, she loses at least a potential dollar.  

Of course if you read about Anchors, you know the above is not always true: an opening offer may give you the first opportunity to affect the other party's expectations about the negotation and the zone of agreement.  

So what is the best way to OOO?  It depends.  Yup, that terrible phrase no one wants to hear.  Here is my personal OOO philosophy:  if the market value of the negotiated item is prevalent and known, be the first to offer.  Also, if you really want something and its rare or you know others want it, show you want it by offering first.  For example:   When I was 6 I got a Jose Canseco card.  My brother really wanted it, so he offered me several cards before I even decided if I wanted it or not.  I was more in to quantity than quality at the time, and not knowing how to read Spanish (thinking it was "Joes" and not "Ho-say"), so I made the trade.  

If the current market value depends on many factors, is difficult to establish, or you know the other party doesn't respect, know, or value current market value, let them offer first.  For example:  Before taking the California bar exam I wanted a jogging stroller because I knew when I would have time to exercise would only be during times I was watching our one-year old daughter.  I had been looking for a while and one Saturday we saw a used one at a garage sale.  There was no marked price, and no real after market, so I asked how much.  I would have paid $10, but their answer was $5.  Also, if there is something I really want, but I don't want to get taken advantage of or I have good alternatives, then I try to bite my tongue and let the other side offer first.

Again though, these are not hard and fast rules, my OOO generally depends on the information I have.  Of course in a lot of situations we do not have to decide who makes the first offer: buying a car, home, retail, etc.  

You know how I OOO, so how do you OOO?  Let us know by commenting, also include a situation where it applied.

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