How do institutions evaluate requests for faculty startup funds if they have never hired in the subfield before? Smaller departments typically want to hire someone with different expertise from the faculty they already have.  Suppose they have decided to advertise that they want to hire an experimentalist in an area of research with which the institution has no experience.  How do they evaluate applicants' requests for laboratory start-up funds?  Assume this is an experimental area where equipment costs are in the six figure range (USD).
We usually follow the following routine:

A) The department chair calls their friends at comparable rank and size schools who have hired in a comparable field and ask them what their new faculty member's startup packages are. The chair may also ask the candidate if they have any special equipment needs. 

B) We assume the Provost (who is in charge of finances) is checking with their colleagues at other institutions as well as what the campus recruitment budget is. 

C) The chair goes into a meeting with the provost and comes up with a third figure. 

D) We then bring that to the candidate who may come back with a counteroffer either based on chutzpah or an actual figure based on what another or their current school is offfering.

E) We negotiate by going back to Step C or drop candidate #1 as too expensive and go to candidate #2.