How Concessions Help Your Negotiation

Offer Valid: 02/09/2022 - 03/09/2024

A concession is when one party gives up something they requested at the beginning of the negotiation to get to an agreement. It may seem that offering as few concessions as possible is the trick to contract success, but the truth is far more complicated. 

Concessions are an essential part of any negotiation. Without both sides making reasonable concessions, the negotiation usually stalls and an agreement cannot be reached. Your goal is to make concessions carefully. The timing and impact of your concessions should be planned before you reach the bargaining table. 

Time Concessions Carefully

A typical negotiation starts with each side having an opposing, potentially unrealistic idea of what they are owed in the final agreement. Over time, this gap becomes narrowed by concessions and trade-offs until both parties reach the zone of potential agreement

Some negotiators may attempt to get to the Zone of Possible Agreement (ZOPA) as soon as possible by offering large concessions early in hopes of coming to an agreement. This strategy is often a mistake. If your counterparty receives everything they want early in the process, they may continue pushing for more. It's much better to break concessions into smaller parts where you can and offer each piece of the concession as the negotiation progresses.

The opposite risk is starting too low. If your counterparty feels that what you're offering isn't valuable, they may continue pushing past the ZOPA in search of what you're really willing to give them. Before the negotiation, you should have a ranked list of issues that you are willing to concede. Wait until you've established your top priorities before offering concessions that will have the most value to them while requiring the least relative sacrifice from you.

Use Concessions to Negotiate

How you present concessions is as important as when you choose to reveal them. You want to make sure your counterparty knows that you are giving up something for the good of the agreement. This encourages them to offer a concession of their own. You can also ask them directly to reciprocate or request contingencies that protect your interests in exchange. 

If you've used your concessions carefully and you're happy with the final agreement, renegotiation is a significant risk. You can avoid your counterparty deciding to renegotiate by making sure the contract looks as good as possible. It costs very little to have a third party look over your contract or compress PDF to preserve your formatting, but these details make all the difference when instilling confidence in your counterparty. A highly-professional contract is the best way to signal to your counterparty that they made the right choice. 

Concessions Are a Negotiation Tool

You should use concessions, along with every other skill in your negotiations toolkit, to inspire cooperation and guide the negotiation towards your ultimate goals. Breaking concessions down into smaller offers, pacing them carefully, and using them to request concessions of your own are all excellent uses of this important asset. 

Joining your local chamber of commerce gives you access to top leaders throughout your business community. 


This Hot Deal is promoted by West Feliciana Chamber of Commerce.