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Negotiation Concessions — 5 Strategies Maximize Deal Results
- The art of using negotiation concessions is a skill that should be learned (it can take years for one to master).
- Negotiation Concession is an instrument that brings both parties participating in a negotiation to the negotiating table together.
- One cannot use negotiation concessions anytime and anywhere – rather, there is a perfect time where an individual can use it to achieve best negotiation results.
The art of using negotiation concessions is a skill that sometimes takes years to master. Getting two people together to discuss a common issue is already challenging enough, but to get two people to listen and finally agree on a concession is herculean, to say the least.
For this article, we are going to define what negotiation concession is, how it can be applied towards negotiations when to use and not use it, and the advantages and disadvantages of this negotiation style.
After reading through the article and our examples, using negotiation concessions should be easier for you. Also, you’ll be able to identify if and when the other party is using concessions and how to turn it around for your advantage.
Negotiation Concession– What is it?
For a seasoned negotiator, a negotiation concession is a tool that brings both parties to the negotiating table together.
Simply put, you or the other party can make or suggest concessions to bring one or the other to a common ground. Think of it as something that can hold two minds into one temporarily to gauge each other.
It is safe to say that negotiation concession is a fairly common sight during a negotiation itself.
Negotiation Concession– When to Use It?
In the hands of a master negotiator, the application of a concession strategy in negotiation provides great impact during the negotiation itself. When used properly, you will uncover important information about the other party.
Important information may include the interests of the other party, their resistance point, their budget allocation, and any costs associated with the negotiation.
As such, a good time to use concessions would be:
- When you want to gauge the other party’s negotiation strength.
- When you want to assess how much budget the other party has.
- When you don’t want to alienate the other party during the negotiation.
- When you want to bring back your position to the negotiation table.
Negotiation Concession– When Not to Use it?
Just like any strategy, there will be times when you have to use a negotiation concession sparingly.
- Giving out too few concessions during the negotiation table will present you as a hardball negotiator and this will ultimately alienate the other party.
- Meanwhile, giving out fewer but bigger demands for concessions will surely anger the other party.
- Lastly, avoid giving premature concessions during the negotiation. A good note about this is when you already gave a negotiation concession and then you give another one before the other party gives out their counter concession.
Real-life Examples From My Experience in Using Negotiation Concessions
In my years as a negotiator, I always tried to make my proposals conditional. This is important for two reasons:
- By doing so, you will get something back for your offer
- By making variables conditional, you will never give something ‘away’ unintended
When considering a conditional proposal, try to avoid introducing more than three items at once. It can prove difficult for the other party to respond or calculate at once in a meaningful way. It also slows down any momentum created. If you factor in every conditional proposal prepared all at once, you are more likely to draw a delayed response from the other party for three reasons:
- Your negotiation counterpart may find it incredibly difficult under pressure to calculate what it all means. Thus, they are more likely to pick off the terms they do like while ignoring the conditions attached to them.
- They will have some ideas that you want to think about first before tabling your entire position.
- They are left without the task of working out links or connections between each conditional proposal, which will probably confuse them even further.
The approach of gradually tabling your proposals and allowing the deal to build requires a lot of patience and a certain degree of comfort with the early ambiguity. Before making any proposals check your and your counterparts’ priorities one last time. Priorities can change at the last minute, so always make sure that you update priorities when it needs changing. Remember, where there is complexity, you’ll need to park elements and return to them later after examining some of the other agendas first. Having a record of proposals will help you negotiate more efficiently.
The Consof Negotiation Concession
Because a negotiation concession is often used during a negotiation, there are also several disadvantages to its use. Some of its disadvantages are the following:
- Negotiators tend to over-rely on negotiation concessions.
- Sometimes, negotiation concessions are used as a means to end a negotiation swiftly.
- When used incorrectly, a negotiation concession can cause harm to your party especially if the concession is considered a loss.
- A negotiation concession must sound sincere so if you don’t have that particular tone of voice or stance, you may have a hard time using it.
The Prosof Negotiation Concession
Being able to handle a negotiation tradeoff without problems is a very powerful skill. This is why as a professional negotiator, it is one of the first few skills that you need to master before everything else.
Some of the advantages that a negotiation concession can bring during negotiations are as follows:
- A negotiation concession sets the tempo of the negotiation itself and can evoke or alter emotions or perceptions.
- A concession is sometimes seen as an act of good faith from one party to the next.
- Being able to understand a concession gives you an edge at times with the other party.
- Employing a negotiation concession can also calm down both parties when negotiations are heating up.
- A negotiator who handles concessions perfectly is seen as an expert in negotiations.
Examplesof Negotiation Concessions
- Randy is a procurement manager for an IT company
- He is trying to purchase computers from a local computer shop at a discounted price
Randy needs to buy 5 sets of new desktop computers in preparation for the newly hired programmers. He is currently talking with the owner of the local computer shop so that he can buy the new computers at a discounted price.
Randy: “Well, your computers are indeed new but they’re not the same brand that we’ve been ordering. Maybe if you can give me a 20% discount per unit, we can call it a deal?”
Owner: “Um, that’s a bit too much sir. You have to understand that I’m running a business here too. Sure, they’re not the same brand but they are new. How about I’ll just give you a 10% discount instead? That works, yes?”
Randy: “Hmm, that sounds tempting. But so does the idea of visiting that other computer shop a couple of blocks from here! It’ll just be a short walk from here…unless you don’t mind changing the discount to 15%?”
Owner:*sighs* “Fine. You’ve made your point. Deal.”
- Amanda is the owner of a small marketing company in town.
- She is currently negotiating her office’s rental fees with her current landlord.
Amanda is shocked to see the new rental rate from her landlord. With her marketing company just recently surviving the recent economic crunch, she is hoping the landlord would be sympathetic enough to give her an extension regarding the new rental rate.
Amanda: “I understand that you have a business here and that you are just trying to survive as well. But if we do close down, you are going to lose a client as well. Can’t you give us two to three weeks to come up with the rental fees?”
Landowner: “Three weeks is too much, I’m afraid. I can only allow you one week. Pay up or get packing.”
Amanda: “Okay, one week is also not enough time for us. We also have employees to pay and other bills to take care of. Besides, I am also sure that we are not the only ones renting in this building who are having issues with rent. But as a businesswoman, I understand that you are only trying to run a business. So I think two weeks is enough time for us to get you the money for the rent.”
Landowner: “Well, you drive a hard bargain lady. But that will do.”
Negotiation concessions are a nuanced art, requiring skill and finesse to master. The exploration of real-life examples from the founder of Procurement Tactics provides practical scenarios, emphasizing the importance of conditional proposals and a strategic, patient approach.
The advantages of negotiation concessions, such as setting the negotiation tempo and fostering goodwill, are highlighted, along with a cautionary note on potential drawbacks, including over-reliance and the risk of perceived losses.
By navigating through the comprehensive guide and examples, readers gain a valuable understanding of how negotiation concessions can be a powerful tool when wielded with precision and situational awareness.
What is a concession in negotiations?
To make a concession is to offer the party a suggestion that can bring both sides to agree on something.
When to make a concession in negotiations?
A skilled negotiator uses concessions to measure the other negotiator’s ability. It is often used as bait to gain important insights.
Why should you make a concession in a negotiation?
Making concessions helps a negotiator test the waters out. This means testing to see if the other side is ready when negotiations start.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.