Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editors Note: This two part post specifies how to deploy specific tactics in alignment with your concession strategy.

A trap used by good negotiators on the unsuspecting amateur is to plant a low (actual) value concession and then demand that you reciprocate.  Beware that the other side also engages in perceived value concessions.  Be prepared to challenge some of those concessions, especially when facing sophisticated buyers

Timing

When is as important as how to make the concession.  Never concede first on a point of major importance to you.  If you do, that point will be seen as trivial since you gave it up so willingly.  Moreover, your offer will be read as weakness and trigger a barrage of other concession demands.  Do not offer concessions too early in the process.  Typically, the greatest movement toward settlement (sometimes called progress) occurs in the waning moments.  Time is always a crucial factor in negotiations and can dictate concession behavior.  If you plan your concessions, you’ll counteract this tendency to be controlled by time.

Converge on Zero

Make concessions in decreasing amounts.  If you give the buyer a $500 initial price cut, and then double it to a $1000 ‘final’ concession to close the deal, the buyer has just learned that it pays to wait and ask for another concession.  Instead, divide your total price concession into decreasing offers.  Begin with the largest, and proceed to incrementally smaller bids.  For instance, give up 40%, 30%, 20%, and a final 10% of your total concession and do so in that order.  The convergence on diminishing returns is apparent to the buyer.

Your concessions, like the overall negotiation, plan should be in writing.  Prioritize the list of concessions from most to least important to you, and estimate the perceived value to the buyer.  The discipline of listing and prioritizing will help to keep on the path through the smoke and flames of the negotiation process.