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 new 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 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,
and cleared out a valuable storage space for the seller who was on the point of
junking the old test equipment into 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.
Author: Tony Atherton
© Tony Atherton 2005 (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 Business Report Writing, Technical Report Writing, Better
Business Writing and Taking and Writing Minutes - as well as Negotiation Skills
and Time Management. For course details click
home.
Enquiries: E-mail direct to Tony Atherton or call 07976-390960
Based in Hampshire, England
Last updated 21 August 2009