Working With Numbers and the Concept of ‘Anchoring’

When it comes to numbers, we “anchor” to whatever number we hear first regarding a specific topic.

• The new manufacturing plant will cost $35 million.

• The marketing initiative will take $5 million of our budget.

• The new training program is going to run us $550,000.

Now, whenever we think of these initiatives, we will rightly or wrongly compare any cost figures to those. In fact, not only do we anchor, we compare and contrast, too.

Say, for example, you are quoted a price for a new training program. Next, you compare all subsequent figures you see and hear, relative to that first figure. And then, another fascinating psychological occurrence happens: The principle of contrast kicks in. If the first dollar amount you were quoted was $550,000 for a training program, and the next one is $750,000, that cost seems even higher than it actually is, because you are comparing it to your anchor of $550,000.

If you’re vying for approval on a budget, and you have numbers to share, always share a range of numbers early in your communication, and make sure those numbers are generous. That way, subsequent numbers won’t seem quite as high, because you’ve already anchored your targets to a numerical set.

Similarly, if you’re trying to dissuade someone from following a particular route, make certain early conversations use lower numbers, which will make subsequent numbers seem even higher by comparison.

Remember, though, that your numbers must always be two things: real and legitimate.

Next time: How do you control unrelated anchors?