How I didn’t get my asking rate (and why that was good)

Hello PRL!

Ever feel like you’ve got the bad end of a bargain? Maybe it doesn’t feel like a bargain at all. Maybe you’re not sure why you accepted that deal. Or maybe it was a great deal, all things considered. Time was short, options were few.

Who wouldn't want to dance? "Festival," photo by Purple Sheep, Flickr CC-By-2.0
Who wouldn’t want to dance? “Festival,” photo by Purple Sheep, Flickr CC-By-2.0

Years ago, I had concert tickets to a summer festival in Eau Claire, Wisconsin. I bought the tickets months before the show. I bought them knowing my wife would be more than seven months pregnant at the show. Still I was certain that she’d want to dance in the fields of Wisconsin. In the middle of July.

When it became clear that we wouldn’t be attending the festival, I had to sell the tickets. Everyone else was selling their tickets, too.  Supply and Demand drove the price far below what I had paid. I had little option but to sell if I wanted to recover any money.

Not the best plan, looking back.

Today I’d like to talk about Anchoring and its role in persuasion and social hypnosis. Anchoring is when we set an expectation, and future thoughts and actions gravitate towards that position. Our mind makes that anchor the “normal” and makes comparisons to that.

Take the ticket prices, where my anchor was the face value of the ticket. The market price was far from my anchor, which made me unhappy.

The buyer’s anchor, on the other hand, was today’s market price of available tickets. She had her pick of sellers. The new expectation of price was set. Time was running out. I was lucky to find a buyer at all.

We can use anchoring to our advantage. We set high expectations to make future comparisons easier to accept.

By first suggesting an expensive dinner out, your favorite pub might become an easier sell. Suggesting a long vacation might open the door to a few days off.  Dropping a hint about a pet goat might open the door to a puppy (but really, I want the goat).

Everyone can use anchoring with salary negotiation. Let me demonstrate.

A few years ago I was applying for some freelance work, just a few hours.  I met the owner of the company for beers and sushi. We discussed the needs of his company.

Once an anchor is set, future comparisons are made to that. "Starting Salary" by studio tdes, Flickr CC-By-2.0
Once an anchor is set, future comparisons are made to that. “Starting Salary” by studio tdes, Flickr CC-By-2.0

Only towards the end of our conversation, after he had agreed that I was the right candidate for the job, did we begin to discuss compensation. I knew the business owner was looking to spend as little as possible. That’s what business owners do.

I knew the opening offer would set the table for what was to come. I didn’t want to be stuck negotiating from his low-ball opening.

Anchoring is when we set an expectation

I made the first move, with pacing: I reminded the business owner that we were there to work through his problem. He couldn’t deny that. I suggested that that he didn’t want to wait and find an amateur for such an important business need. Again, I had him saying yes in agreement. I closed by telling him that I was a great fit for this position. Then I laid my anchor: I told him my hourly rate.

I didn’t get that rate.

But I got the job. I anchored my price point in his mind. We negotiated downwards a bit, no big deal. We agreed upon an hourly rate that was above my previous freelance income. I was happy with the exciting opportunity and good rate of pay. The business owner was happy. He rightly felt that he negotiated a fair price with a competent professional. Win-win, like any good negotiation.

How about you? Can you identify anchors in your previous negotiations? Do you have an idea when setting a high expectation can work to your advantage?

Let us know in the comments below!

I’ll be releasing my upcoming PRL Executive Summary soon, discussing Claude C Hopkins’ book, My Life in Advertising.  I’ll give away one FREE copy to a member on the PRL Email List. Sign Up Today!