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NEGOTIATING SKILLS - Making Concessions

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You often hear that someone in a negotiation gave away a concession. It's an interesting phrase 'gave away' because good negotiators, whether professional or amateur, rarely give away concessions. Some, as a point of principle, never 'give away' a concession. Someone with good negotiating skills 'trades' concessions.

By its very nature a concession – however easy it is for you to make or however trivial it might seem to you – is worth something to the other party. Therefore good negotiators put a value on that concession and will exchange it, or trade it, for something they want in return. Whenever you think about making a concession always ask yourself the question – What am I getting in return?

What you get back will often depend on how much thought you put into your preparation. Part of good preparation is to think through what you might ask for in return for a concession. Also, be careful about how you put a value on these concessions – both what you are doing for the other party and what you are getting back. The ideal win-win concession exchange in a negotiation is to trade something that costs you little but is valuable to them in exchange for something of similar (or greater?) value to you.

As an example, I once knew someone who traded the low-cost hire of some old electronic test equipment in exchange for a signature on a contract to buy a new system. The test equipment was of little value to the seller and was just sitting in a store cupboard waiting to go into a skip whereas hiring it cheaply was valuable to the purchaser. Whilst the purchaser had the funds in the current year's budget to buy the system he did not yet have funds to buy the test equipment that would help him get the best from the new system. Hiring (using revenue funds) cleared the way for the purchaser to buy the system now, cleared out some valuable storage space for the seller and saved him the cost of hiring a skip.

It is worthwhile thinking about just how you discuss making a concession. If the other party is simply asking for something, say a discount, you could make agreeing to that discount conditional on, say, an increased order. If that is your thinking then you are about to make a conditional offer. This can be done in two ways depending on whether you state what you want in return first or second. Both approaches have their adherents.

Putting your demand before your offer is often seen as forcing you to think about what you want in return rather than gifting things away. If you will increase your order by 1000 units then I might be able to look at a discount of around 5%. Alternatively, putting your offer before your demand is seen by some as putting the other party under some social pressure to reciprocate and be as nice as you are being. I might be able to offer a discount of around 5% if you can increase your order by 1000 units.

In either case, one course of action is conditional on the other. Do not let them believe that you have just indicated that a 5% discount is feasible for the existing order. It may be wise to open with a phrase such as: I cannot give you a discount on the existing order but…

Notice that in these examples the offer is tentative but the demand is precise. I might be able to… no firm commitment is made, but a firm demand is… 1000 units. Of course, having said this the other party is going to expect you to deliver on this idea – but, importantly, that word might leaves you some room for manoeuvre whereas the 1000 units attempts to pin them down. Naturally, as the discussion progresses you will move to precision in both the offer and the demand.

Let's sum up the important points about the negotiating skill of making concessions:

  • Never give concessions, always trade them for something back.
  • What you are conceding is valuable to the other party; how valuable?
  • Make your demand something that is worthwhile to you.
  • Always make your concessions conditional: If you will do this... then I might do that.
  • Consider putting you demand before your offer.
  • Make your demand precise but leave some room for manoeuvre in your offer.
  • Before making your offer, rule out any chance of it not being conditional on your demand.
Finally, if other people negotiate on your behalf then you should always ask for a report on how each negotiation has gone. When you do this, push them to improve their negotiating skills by asking them this question: What did you concede and what did you get in return?
 

Author: Tony Atherton
Tony Atherton 2005, 2013 (For permission to reproduce this article please write to Tony Atherton)

 

About the author:
Tony Atherton is a freelance trainer and writer with over 25 years' experience. He runs in-company courses in Technical Report Writing, Business Report Writing and Minute Taking. For course details click home.

 

Enquiries: E-mail direct to Tony Atherton or call 07976-390960

Based in Hampshire, England

Last updated 24 July 2014