HBS Working Knowledge: Strategy: When to Make the First Offer in Negotiations

Don't be afraid to be aggressive
How extreme should your first offer be? My own research suggests that first offers should be quite aggressive but not absurdly so. Many negotiators fear that an aggressive first offer will scare or annoy the other side and perhaps even cause him to walk away in disgust. However, research shows that this fear is typically exaggerated. In fact, most negotiators make first offers that are not aggressive enough.

An aggressive first offer can work in your favor for several reasons. Take the perspective of the seller: more extreme first offers lead to higher final settlements. For example, higher listing prices lead to higher final sale prices in real estate transactions because, as we've seen, high-anchor offers lead buyers to focus on a negotiated item's positive attributes. In addition, an aggressive first offer allows you to offer concessions and still reach an agreement that's much better than your alternatives."