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April 29, 2014
Anchoring: How to Negotiate Any Price

It’s called throwing out an anchor. When you know the range and the scope of work, it’s to your advantage to establish your price first. There are several reasons to do so.

When you describe the scope, schedule, and price — especially price — the other party tends to move to it. They feel that your price must be respected, even if they don’t want to pay it. If they do wish to haggle over price, they’ll do so with the assumption that your price is the top of the range. They’ll negotiate knowing that to keep you in the discussion they can only offer what would be considered an acceptable level below your anchor price.

There is a bit of the reciprocity effect going on here. When we want to keep the conversation and the relationship going, we respond in a manner that is not disruptive. It’s just good manners to honor the other person’s needs and point of view. It’s automatic. It feels right. We can’t counter too low because it would feel rude.

Finally, there is the expert effect. As a creative professional, we’re experts in our field. We have the education, experience, and perhaps a few case studies that demonstrate our expertise. We’re credentialed. So when we establish what is required to achieve our client’s goal, they have to accept it. After all, they came to us asking for a proposal. This does not mean that they will not push back on price, but that they are limited to how low they can counter.

Price range is important in all of this. If you are negotiating over a salaried position, it’s easy to check the salary surveys to determine the range. If it’s a creative consulting project, you should know the price range from past work. But you can always go to the creative guides and press accounts to uncover typical fee ranges.

Remember, you always want to ask for just a bit more than the top of the range. Doing so honors your client, or employer, by indicating that they are getting the best talent at a “best talent” price. After all, you get what you pay for.

So, throw out the anchor.

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Ted Leonhardt has provided management consulting and negotiation training exclusively to creative businesses since 2005. He cofounded the The Leonhardt Group, a brand design firm in 1985 and sold it in 1999. In 2001 and 2002 Ted served as Chief Creative Officer for Fitch Worldwide, out of London. In 2003 through early 2005 Ted was president of Anthem Worldwide, a brand packaging design group.     
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