Price negotiations are often the ultimate test in sales – whether you’re negotiating the price of a property, selling a commercial electricity supply contract, or offering a client a complex financial solution. Two psychological phenomena can help you get the best possible outcome in such negotiations: the anchoring effect and loss aversion. Both are well researched and can be deliberately applied to achieve better terms.

The Anchoring Effect: The Power of the First Offer

The anchor is the first concrete offer placed on the table – and it exerts a powerful pull. Just as a ship’s anchor holds it in place, an early price suggestion unconsciously draws the subsequent course of the negotiation toward it. Psychologists have shown: Whoever names a high (i.e., advantageous for you) price first shifts the frame of reference. Your counterpart will automatically calibrate their counteroffer against that figure.

Tip 1: Don’t hesitate to name the first price yourself, as long as you can confidently assess the value of your offer. This way, you take control from the start.

Tip 2: Set your anchor high – but not absurdly high. A completely unrealistic offer can be perceived as an affront and may cause the conversation to collapse. Choose an initial price that is above your actual target but still justifiable.

Tip 3: Be precise. Studies show that precise price anchors appear more credible than round numbers: A proposal of €4,950 often performs better than a neat €5,000 because it feels less arbitrary. An interesting tactic is the phantom anchor: Pair your actual offer with an even higher figure that you immediately “concede” from (“I was actually going to say €6,000, but I’ll meet you at €5,000”). This frames your price as a concession from the start.

Tip 4: Counter external anchors immediately. If the customer unexpectedly goes first (“We had a maximum of €300,000 in mind”), respond right away with your prepared counteroffer. This prevents you from being pulled entirely into the customer’s price range.

The anchoring effect is a powerful tool, but it requires preparation and finesse. The key is to be able to justify your high starting price – with arguments about quality, service, or market comparisons. This gives you a built-in rationale for why your offer is worth its price.

Loss Aversion: Avoiding Losses, Locking in Gains

Loss aversion means that people feel the pain of a loss more intensely than the pleasure of an equivalent gain. Put differently: Losing €100 hurts more than winning €100 feels good. In negotiations, this principle means your counterpart is more likely to agree to concessions if they perceive them as avoiding a loss rather than suffering a loss outright.

Backed by research: Negotiators show more willingness to compromise when they focus on what they stand to gain from a deal, rather than what they might lose. The reason is loss aversion – a small concession feels less painful when it’s seen as a smaller gain instead of a bigger loss.

Rather than merely emphasizing potential gains, show the customer what they stand to lose if they don’t choose your solution.

Example: 
Instead of saying:
“With our system, you can save up to €1,000 a year.”
Say:
“Without our system, you lose around €1,000 every year in unnecessary energy costs.”

The content is identical – but psychologically it’s far more effective, because people react more strongly to avoiding losses than to achieving equal gains.

You can also apply this in your offers. A line like, “If you book today, you not only lock in the current price – you also get Service X for free. Tomorrow, it might be gone,” creates urgency through the threat of loss rather than a mere “nice-to-have.”

This way, your offer doesn’t feel like a demand – it feels like an opportunity one doesn’t want to miss.

In emotionally driven sectors – such as property purchases or financial consulting – buyers want to feel they’ve made a good deal and avoided any loss. Use this by proactively minimizing perceived risks (guarantees, free trial periods, testimonials from satisfied clients) and highlighting the secure benefits. For further insights into industry characteristics you take a look into the blog "Successful selling in energy, real estate & finance: What sales representatives really need today".No customer wants to make a mistake and lose money. Show them that with your solution, they are firmly on the winning side. Especially when multiple people are involved in the decision, this effect is amplified – nobody wants to be the one blamed for a bad deal (see Identifying and Persuading Hidden Decision-Makers in the Sales Process).

Negotiation Success Through Psychology and Practice

Bottom line: Mastering the principles of anchoring and loss aversion gives you a clear edge in price negotiations. You can assert prices more confidently while leaving the customer feeling positive about the deal. Of course, no technique replaces a solid value proposition – but these psychological levers can reinforce it cleverly.

Remember that negotiations often aren’t over when the conversation ends. If your counterpart hesitates or says they want to “sleep on it,” that’s when the real work begins: Stay engaged and arrange a follow-up (see Follow-Up Strategy: 7-Touch Approach Without the Annoyance Factor) to prevent the deal from going cold. And if a customer bluntly says “too expensive,” you shift into objection handling (see The 5 Most Common Objections and AI Strategies to Overcome Them). There, you can counter with added value, storytelling (see Storytelling for Complex Offers: Selling Technical Solutions Clearly), or flexible proposals.

The good news: All of this can be trained. In modern sales training, such price negotiations are simulated in roleplays – sometimes even with AI support. This builds confidence in handling typical negotiation tactics – and ultimately boosts your chances of success in real client conversations.