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Anchoring Works

Anchoring Works!

What is anchoring? Anchoring is the mental process of introducing bias to our favor.

Why tell? Instead, how about a story? My nephew has decided to help me paint a room in the house for the summer. The enterprising soul wants money but not a crushing summer job. Unfortunately, for him (or maybe fortunately), I have a strong policy of requiring children to negotiate. As such, he has been negotiating with me since he was a toddler. This time, this time, this backfired. Recently, I had taught him about anchoring and the power of using an unrealistic number to anchor-first when starting out a negotiation. I asked him, “What would you like to make on the room?”

And without missing a beat he stated, confidently: “$500”. Nearly choking I was caught of guard. He had used my weapon against me. I figured I was going to pay $75 at most for the afternoon of labor. I countered: “Well, I was really looking at $100”.

“Any less than $275 wouldn’t be fair,” he said. We ended up settling on $250.

How does this help you? Most people only negotiate a few times in their lives and don’t have the experience to negotiate well. We need to better negotiate to get better deals and save our time and money for better endeavors. By using anchoring we can not only save money but save our time and by using Anchoring we can really hit hard to start a negotiation off strong and in our favor.

In fact, don’t think of a negotiation as a waste of your time. Think of negotiation as a savior of your time! Let’s take my most recent negotiation where I saved $10,000 on a car and see what the 8-hours I spent were worth in opportunity cost:

 $    45,000.00 426.6667
 $    55,000.00 349.0909
 $    75,000.00 256
 $  125,000.00 153.6
 $  150,000.00 128

A strong negotiation that nets $10,000 in savings or earnings will give you give 426 hours of your life per year! Looks like the 8-hours of pain was worth the effort.

Use anchoring as a great tool in your tool-kit for how to start any good negotiation. And remember, a good negotiation leaves both parties happy to do business again another day!

Ennis Lynch

Ennis Lynch

Ennis Lynch is a Professional Coach Based in South Florida. His primary area of coaching focuses on coaching Software Engineering Leadership. On occasion he does Agile Transformation work as well but prefers coaching at the Team and Individual level vs. the organizational level.

If you have ever wondered: is professional coaching right for you ? Are you a Software Engineering Manager, Director of Engineering, Director of Software Engineering, VP of Engineering, or CTO reach out for a free initial coaching session. Initial coaching sessions are the real deal, no hard-sells, no "here is what you would get if you paid". Individuals that receive a free coaching session will get a normal private professional coaching session of 90 minutes (30 minute onboarding + 60 minute coaching) and it will be up to you to follow-up if you want to continue with help on your journey.

Ennis Lynch

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