Most negotiation experts disagree with this advice. The first person who gives a number anchors the conversation to that number. When you name a number you certainly do set a max on negotiation, but you also get to set the starting number. And many negotiation experts think the latter is more valuable than the former.
So they can start off trying to negotiate you down from your max, or up you can spend your time trying to negotiate them up from their min.
If you're doing something like selling your startup, you want to set the anchor price, yes. There is such a huge range of outcomes, it's best for you to shoot high (as long as you're comfortable with the risk of scaring the buyer off) as the seller. (Or to start and shoot low as the buyer; with the walkaway risk reversed.)
For something like salary negotiation where results are more well-bounded and there is a lot more commoditization (ie replacements are relatively easy to find, or are perceived to be relatively easy to find), you generally don't want to anchor. An anchor that's way out of whack is easy to shoot down (show comp data). Anchoring slightly high/low doesn't buy you much as there is no real anchor... you're just in the established/known range... and so it's more valuable to see where the counterparty starts off an dplay from there.
There are unique situations / exceptions of course. For example, you might have uniquely valuable skills for a given company (or be able to convince them you do) and therefore move into a less-bounded zone of negotiation, in which making the ask/establishing the anchor would again be a good idea. But for a normal, well-established position, there is literally no benefit in "anchoring" as the bounded range is already fairly well established and that is the anchor.
Still, coming up with that first number is very tricky. A application of mine once reached the salary negotiation phase, and the company asked me what I was expecting. I didn't want to go so high they were insulted, so I took what I thought was a reasonable number and bumped it by 40%.
They said "okay". No negotiation, no fireworks, nothing. I've always wondered what I could have gotten out of them.
I guess the fear is that you'll anchor it "lower" than they would have. Example if they are intending to pay 120, and you say "I'm hoping to make 110" they might just come down to 110. But I suppose if you start at your high range that might be in your favor. Some of us (myself included) just don't know what we're worth so it's hard to know how to start the deal...
Also if your problem is every time you look for a job people keep on wanting to throw more money at you than you could ask for with a straight face. Well then dang I wish I had that problem :)
This problem is usually because people just set their starting price too low, or aren't firm enough on it. One tactic(I haven't used yet, but I'll try the next time I apply to a job) is ask the hiring manager how selective they are. Many time they'll brag about how hard it is to join their company. They'll say things like "We only accept 1 in 10 developers". Boom now they just admitted that if they were paying fair market value their offer should be about $153k :). [0] This is a great place to start a salary negotiation. Also glassdoor is a good place to find information for where to start a salary negotiation as well.
[0] 80% of devs get paid between $57k(10th %) and $153k(90th %).
That sounds similar to the idea the Overton window[0]. I've thought for a while that I hope I get to say what I want before they say what they're offering. The hope is that if I say a high number then we will be negotiating based on that high number rather than some unknown, possibly lower one.
The other school of thought on this is that the first person to talk numbers has the upper hand due to anchoring power
> Just like the word suggests, you want to set a reference point around which the negotiation will revolve. Making the first offer can be to your advantage, as this offer might set the height of the negotiation bar. This anchor is the arena where the two parties will wrangle in a tug and pull negotiation scenario. Interestingly enough, many studies have shown that the first offer has a strong psychological pull, almost a magnetic lure. The resulting agreement is often strongly attracted towards the person who proposes the first offer.
This works iff you shoot very high/low and if it's a very fungible range of possible outcomes. In something that is fairly well-bounded like job compensation (or most residential real estate transactions, as another example) it's usually better to let the counterparty turn the first card.
That's a sensible rationale as well, but if you are already familiar with the bounds of compensation, may it not be preferable to throw out a number that's slightly higher than the upper bounds of that yourself?
Since employers know the bounds as well, letting them name the first price would seem likely to result in a number that's near the mid range and not take into consideration you as an individual (skills & personality), it would be irresponsible for them not to try to mid-ball you even if they really like you, no?
Yours is a good thought too. Here is my perspective/experience:
Scenario 1: You start at the high end of the range or just a bit above it, I think you risk the employer coming in low as a counterplay, expecting to meet in the middle. Now, it's up to you whether you do actually meet in the middle, or hold firm and move them way up, or just end the negotiation entirely. But I think this opens up their strong counterplay and establishes their ability to take the reasonable-seeming ground that it's fair to meet in the middle (even if it isn't).
Scenario 2: They throw out the first price.
Scenario 2a: They throw out the first price, and it's low for the range. Now you can counterplay by going high. You also can take the strong moral high ground here by showing comp data and basically saying that it seems like they're not being fair or don't value your experience and skills correctly, which is a concern to you. Often, this will be enough to get them to offer a higher price, and you can then spring from there to continue negotiations from this higher spot. Whether they offer a higher price or not, you can start high and employ meet-in-the-middle even from the low starting point. So, Scenario 2a is no worse than Scenario 1, and has some chance of being better.
Scenario 2b: They throw out the first price, and it's mid- or high for the range. Hey! Free money! Now you can safely shoot higher and hopefully end up somewhere between where they started (already on the good side of the range) and where you countered. :-D So, again, Scenario 2b is at least as good as Scenario 1. Very rarely will a company demand no negotiation whatsoever (and maybe you want to tell them kiss off if they do, unless they have a very good philosophical / values-based reason for doing this, and they do it consistently with all candidates), so you're only bettering your position by opening the possibility for them to start somewhere above the low-end of the established market range.
By combining all the above logic, you don't want to go first.
In practice, I think this works a lot better for prospective employees too. :-) I personally think companies should offer first, for this reason (even though it's bad "negotiation" on the company's part... I actually don't think employing people is a zero-sum game, let alone a one-turn game... so I think you're better off trying to position them well. But of course not all employers think this way, and it seems in fact most do not.)
So they can start off trying to negotiate you down from your max, or up you can spend your time trying to negotiate them up from their min.