Deals That Make Money: How To Plan Your Concession

by drjim on July 18, 2008

Concessions are a powerful negotiating tool

Concessions are a powerful negotiating tool

When negotiating deals with someone, you realize that they aren’t just going to roll over and give you everything that you ask for. Instead, they are going to expect you to participate in a back-and-forth, give-and-take discussion in which both sides are expected to both concede as well as gain issues. This means that you need to have a strategy for each concession that you plan on offering to the other side. Looks like this calls for some serious planning!

First, let’s make sure that we all understand why we are willing to make a concession. There are two reasons that you’d make a concession during a negotiation. First, to persuade the other side to move us close to a deal or to avoid a deadlock. Secondly, to increase the other side’s satisfaction. Both of these reasons provide a powerful motivation to make concessions when it makes sense.

There are actually a great number of nuances to the best management of concessions; however, here are the four most important approaches that you should start to use immediately:

  1. Leave Yourself Lots Of Room (to Negotiate): Remember that a concession is a tool that is designed to help you move the negotiation along. If you leave yourself a great deal of “wiggle room” then you find that you’ll have more room in which to use your concession tools.
  2. A Concession Should Be Given Slowly — Be Stingy!: So much of the process of managing a concession has to do with managing the psychology of the other side. If you are too quick to offer a concession, then the other side will give it little value. If instead, they feel that they they had to work hard to get you to offer the concession, then they will highly value this hard won success.
  3. A.I.R.: Ask for something In Return.: This is a subtle one, but you need to make sure that you clearly communicate that during the negotiation, nothing is for free. This means that every time you make a concession, you need to ask the other side for something in return. The challenge comes because you don’t want to be seen as conducting a 1-for-1 negotiation. Instead, you’d like to be seen as more casual and carefree. However, deep down inside you need to be tracking all concessions and making sure that you’ve gotten something in return for everything that you’ve given up.
  4. Watch Your Rate Of Concessions: Yes you will end up making several concessions during a normal negotiation. However, you need to make sure that you space these concessions out and don’t bunch them together. Otherwise it will look like you are willing to give up more than you are. Especially be careful about what happens as you approach the end of the negotiation. Studies have shown that 80% of the concessions that are made, are made in the last 20% of the negotiation time. Don’t let deadlines cause you to make too many concessions!

There you have it. Using these four guidelines, you can turn a concession from an admission of negotiating weakness into a powerful tool.

Tags: deals, concession, money, negotiate

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