The Negotiation Is Decided Before the Concessions Start

Most negotiation training spends its time on the middle of the process. How to concede, in what increments, how to signal that a position is final. That is where the skill feels like it lives, because that is the part that feels like negotiating.

The evidence puts a lot more weight at the start, before anyone has conceded anything.

The opening number does more work than the sequence after it

Across three experiments, whichever party made the first offer, buyer or seller, obtained the better outcome. In a buyer and seller negotiation over a chemical plant, the correlation between the first offer and the final agreed price was .85 (Galinsky and Mussweiler, Journal of Personality and Social Psychology, 2001).

A later meta-study of the same effect put the correlation between initial and final offers closer to .497, so the laboratory figure is at the high end of the range. Take the direction as well established and the magnitude as contested. Even at the lower estimate, the opening number is carrying a large share of the outcome.

Why this cuts against normal buying practice

Standard practice is to ask the supplier to quote first. There is a defensible reason for that: you learn something about their pricing, and you avoid opening above what they would have asked. The research says you are also handing them the anchor, and the anchor is doing more work than your subsequent negotiation of it.

That is a real trade rather than an obvious error. It is worth making deliberately rather than by default, and the balance shifts with how much you already know about market pricing. Where you have benchmark data, the information you gain from their quote is small and the anchor you surrender is not.

The finding that is actually usable

The more useful half of that research is what neutralizes an anchor once it lands, because most of the time you will be receiving one.

The advantage of moving first disappeared when the other negotiator focused on information inconsistent with the first offer. Three things worked: thinking about the opponent's alternatives to the negotiation, thinking about the opponent's reservation price, and focusing on one's own target. Each eliminated the first mover's edge.

Note what is absent from that list. Not making a counter-offer. Not arguing about the number. The intervention is attentional, and it happens before the response.

What that looks like in a sourcing negotiation

The supplier's quote arrives. Before you respond, write down what happens to them if this deal does not close, what their capacity utilization looks like this quarter, what your volume represents against their book. Then write your own target, sourced from your should-cost model rather than from their number.

Then respond. The order matters, because the anchor works by making some information more accessible than other information, and the counter is to deliberately retrieve what it suppressed.

Where the concession sequence still matters

None of this says concessions are irrelevant. It says they are a smaller lever than preparation and that they work through a specific mechanism.

The integrative bargaining literature is consistent about that mechanism. Joint gains come from trading concessions on issues you value less for gains on issues you value more, which requires that the two sides value the issues differently. Negotiators who take issues one at a time resist conceding on each, as though every issue were the most important. Negotiators who work several issues as a package concede more readily on the ones that matter less to them.

In a purchasing context, price is the issue least likely to carry that asymmetry, because a pound moved is a pound moved for both sides. Payment timing, contract length, volume commitment and delivery flexibility are more likely to be valued differently by the two organizations, because their capital costs, revenue recognition pressures and capacity positions differ.

An honest limit on that claim

The experimental literature tests issue-priority asymmetry generically. It does not isolate price against payment terms specifically, and the studies mostly use laboratory dyads with a known payoff schedule. Real purchasing involves repeated dealings, reputational effects, internal politics on both sides, and no visible payoff matrix.

So treat the mechanism as well supported and the specific worked example as a reasonable inference rather than a measured result. The instruction that survives is narrower and still useful: find the issue where your valuation and theirs diverge most, and trade there rather than on price.

What to change on Monday

Decide the anchor question deliberately for each negotiation instead of applying one rule to all of them, weighing what their quote teaches you against the anchor it establishes. Prepare a written target before any number is exchanged, drawn from cost modeling rather than from their opening. When their number lands first, run the three counters before responding: their alternatives, their walk-away, your target. And build the concession plan around whichever issue your organizations value differently, which is rarely the price itself.

For category strategy and supplier management, see our articles and resources, or the tools for market and spend analysis. To discuss a negotiation program, get in touch.

References

1. Galinsky, A. D., and Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657 to 669. pubmed.ncbi.nlm.nih.gov/11642352
2. Moran, S., and Ritov, I. (2002). Initial perceptions in negotiations: evaluation and response to logrolling offers. Journal of Behavioral Decision Making, 15(2), 101 to 124. doi.org/10.1002/bdm.405

Disclosure: This article is published by SourcingTomorrow and reflects our analysis and commentary on procurement and sourcing practice. It is for informational purposes only and does not constitute legal, financial, or operational advice, and should not be relied upon for purchasing, contracting or vendor selection decisions. Consult qualified advisors for guidance on specific situations.