Making Concessions

Experienced negotiators know that successful negotiations involve a certain amount of give and take, and are well versed in the process of making concessions. They tend to develop offers that leave room for concessions, as these are the oil that lubricates the making of a deal.

Conceding in small steps

Each negotiation event is unique, so there are no absolute rules for how to make concessions that apply to all situations. However, it is generally true that people like to receive good news or benefits in installments, rather than all at once. Skilled negotiators, therefore, tend to make multiple small concessions in order to increase the level of satisfaction of their counterparts.

Knowing what to concede

Inexperienced negotiators often make a first sizeable concession as an expression of goodwill. However, this can set the expectation that there are many concessions to be provided. Experienced negotiators, by contrast, tend to untangle the relationships from the concessions. Sometimes, in order to set the tone of reciprocating concessions, they concede first by making a concession on a minor issue.

Wait before you make the first sizeable concession. During this time, advocate for your initial offer and convey the idea that it is not that easy to make concessions. The second concession should be smaller in size than the first and be a longer time in coming. Making concessions in progressively declining installments will then lend more credibility to when you finally say: “There is no more to give.”

Making and interpreting concessions

• Enabling reciprocity

  Label the concessions you make as ones that are costly to you and then reduce your value. This sets up the expectation that you will receive a concession in return, implying value for value.

• Using contingency

  If you suspect that your concession will not be reciprocated, offer a concession that is contingent upon the other party providing a concession in return. For example: “I will be willing to extend the terms of payment to 45 days if you will increase your order by 500 items.”

• Setting boundaries

  Some negotiators put the deal at risk by asking for too much. Set boundaries for the other party by being clear and precise about what you can concede and what you absolutely cannot.

• Setting rules

  Sometimes negotiators make final concessions but then withdraw them or make them contingent on receiving a new concession. Set a clear rule that a concession cannot be withdrawn, unless it was explicitly offered as a tentative or conditional concession.

• Spotting deal-breakers

  Some concessions are deal-breakers: if they are not offered, your counterpart will walk away from the negotiation table. Try to distinguish these from value-enhancing concessions, which are demands that are designed to get a better deal, but if not provided, would not result in the other party abandoning the negotiations.