The STA rule for negotiation

Negotiation is a skill for the masses. It helps the mightiest CEO as much as the average executive, not discriminating between profession or class, but doling out similar benefits. Despite the apparent benefits, not everyone can master the art of negotiation and it shows in the ways some people walk out with the best and worst of deals. Experts in the game have now laid out the number one ground rule for effective negotiation to have in your arsenal and this may be the game changer you are waiting for.

The ground rule in question is called STA or Set the Anchor. The anchor price is basically the first number that you see, that officially starts the negotiation. This number holds the power to influence the negotiation throughout, whether consciously or unconsciously, as it has several human biases attached to it. For instance, think of the sticker price. As soon as one sees it, one associates it with the value of the product. Whether or not the price is inflated, a shirt with a sticker price of Tk 4000 will seem like a superior quality shirt, and starting off the negotiation at half the price may seem too adversarial for comfort.

The brain plays a similar trick even when the numbers are not related to pricing. For instance, a group of people were asked to write down the last two digits of their Social Security Numbers. The study found that the "anchoring effect" completely messed up their ability to judge the values of the things they were buying. Those with higher digits tended to bid up to 346 per cent higher for items than those who had written lower numbers. Similar studies have found that 90 per cent of the negotiated deals were almost consistent with the first offer, even if the offer was unjustified.

Bottom line: the number that is voiced out first sticks. It becomes a reference point for both negotiators and final numbers coming out of the bargain will mostly always be aligned with the reference number. This theory kind of throws out the negotiation tactic we have always been using — asking the other party to state their best offer — as a buyer, you will have to work up even more courage to voice out a fair counter offer without giving in to the above biases and as a seller, you may be reluctant to admit that your "best" wasn't really your best after all.

Seasoned negotiators have a better idea. They suggest that one should never shy away from speaking out a number. If you are the seller, this number should be relatively high. If you are the buyer, don't be afraid to give out a number that's much lower than what the seller might expect. For those items that are not on the price list, for instance, when one evaluates how much their skill might be worth, they should weigh out their SWAT, and once they are sure that they are neither overcharging their client, nor short-changing themselves, they should boldly take charge of the negotiation.

Set the anchor first, in a nutshell — as long as it's a reasonable one.