Next time you’re negotiating, don’t offer up a round number. Pick a precise one instead.
Because if you give a specific figure in euros or dollars or yen, you’ll look more intelligent and informed—and likely end up with a better outcome, according to new research from Columbia Business School.
“Precise numbers are these potent anchors,” said Malia F. Mason, one of the study’s authors and an associate professor of management at Columbia Business School. She argues that asking for $52,000 or €95,500, for example, can be far more effective than the more commonly used round numbers like $50,000 or €100,000.
Giving an exact number implies “the state of your knowledge” on whatever you’re valuing and also conveys your confidence that it’s appropriate, the professors report in a study about to be published in the Journal of Experimental Social Psychology.
The approach could work whether you’re buying something on Craigslist or even negotiating a new salary, though the researchers did not look at pay in the six studies they did, Mason said in an interview with Quartz.
“It should apply to any negotiation that involves quantity” including your pay rate, said Mason. When you’re being recruited for a job, though, salary is just one part of the discussion, she added. Mason teaches managerial negotiation classes and researches how people understand each others’ attitudes and explain their behavior.
So how precise do you want to be? “Know that the numbers that you use imply something about the state of your knowledge. Be a little more precise than you’d otherwise be,” Mason said.
Overly precise numbers do carry some risks and downsides, and may be perceived as signaling inflexibility or could trigger skepticism if the other party already has doubts about your expertise, the authors say. Still, in six studies involving experienced managers, MBA students and undergraduates, the precise figures generally brought better counteroffers.
Mason got the idea for the research on precision while taking a taxi in Prague. Her cab driver asker her for a 1,000 korunas fare. Though she admits she didn’t know how far away her hotel was from the train station, “it felt like the fare came from no where… like he pulled it out of a hat,” she said. With several cabbies in the area, she found another and recalls paying around 700 korunas instead. “I was with a friend who knows I teach negotiation,” she recalled. So afterward they dissected the experience in detail, and from there the research commenced.
“People love rules and recipes for success in negotiation,” said Mason. Yet many of them are “full of it” because they don’t consider the context and the goals.
If all you care about is getting a very high price, “then it helps if you make the opening offer, and you make an extreme opening offer… It almost exerts a gravitational pull,” she said . Of course, it could also cause the other side to walk away.
Instead, set a high but but slightly less extreme and precise number and you’ll do better in your negotiations.
When you give a precise sum, say $10,500 for the two-month contract, make sure you can explain why you named that number. “Seeming informed is one thing,” said Mason. “Being informed is far better.”