How to Set the Opening Offer in a Negotiation

By Consumer Dummies

The opening offer is the first specific statement of what you’re looking for in a negotiation. After you’ve set your goals for the negotiation, you can consider the opening offer. For example, in a job interview, the opening offer is the salary you’re seeking. Don’t look for any hard-and-fast rules or magic formulas. To determine your opening offer, you should draw heavily on the goals and limits you set and the information you’ve gathered while preparing for the negotiation.

Your opening offer should be higher than the goals you’ve set for yourself. But it shouldn’t be so outrageously high as to be off-putting to the other side or make you look foolish or inexperienced.

Opening offer in a negotiation
The relationship among your goals, limits, and opening offer.

Whether the amount you state in your opening offer is higher or lower than the amount of your goal depends on whether you’re the buyer or the seller (you determine how much higher or lower through good preparation):

  • If you’re the seller, your opening offer should never be lower than the goal you set.
  • If you’re the buyer, the opening offer should never be higher than the goal you set.

People are quite anxious about the opening offer. They’re fearful that they will mess up the entire negotiation by blurting out a demand that is too modest or too ambitious. State your opening offer positively and precisely. You want the ability to measure your achievement. Use your anxiety level as a measure of how well prepared you are. Part of being well prepared is knowing relative values. If you know the value of what you’re offering, the opening offer is easy to deduce. You just decide how much negotiating room you want to leave yourself.

Have your opening offer in mind even if you don’t plan to state it openly. This approach speeds your reaction time to whatever offer the other side makes.