With concessions, it is vital to begin at the beginning, meaning that as you start your preparation for a negotiation – long before you sit down at the negotiating table – you must identify what concessions you can make, and what concessions you think the other side will be willing to make, in order to come away with what each side really wants most. Here are some important principles to keep in mind when planning concessions:

1. Items you control that you perceive as having relatively low value for you may be perceived by the other party as having high value to them. (Do you know and understand the other party's perceptions?)
2. Items controlled by the other party may have relatively high value to you, while the other party may perceive the same items as having relatively low value for them. (Again, do you know and understand the other party's perceptions?)
3. Therefore, when trading concessions, try to offer items which are of low value to you, but which the other side perceives to offer high value to them, in hopes that the other side will offer something that offers high value to you but which they perceive as having low value to them.

Example: As the owner of a bed and breakfast, I might offer free rooms in the off season (when they might not be rented any way) to a roofing contractor in exchange for discounted labor charges on the reshingling of my B&B roof. The roofer essentially exchanges free or reduced labor for nights at resort that might cost several hundred dollars.

4. Cardinal Rule of Negotiation: Never give a concession without getting one in return. (Quid Pro Quo)
5. Whoever gives a large first concession without getting one of equal value in return, generally gives up the most in the negotiation.

Identify/Prioritize Concessions & Trade-Offs

• First, identify the trade-offs that you desire and concessions that are the easiest for you to make (lowest value to you, but which might be valuable to the other side). You may not always get what you want, but it is important to start here if you can.
• Next, define the trade-offs that you realistically believe you will be able to achieve and concessions that you realistically think will be necessary (concessions to offer that have a slightly higher value to you, but which the other side still values even more). If both sides are committed to a Win Win solution, you will probably end up here, with both sides giving up something of comparative value in exchange for receiving something they value even more.
• Finally, determine the basic trade-offs that you must achieve and the concessions you cannot afford to make in order to protect and or achieve your most important interests in this negotiation. In other words, what concessions might the other side ask of you which are simply too valuable to give up, and what is THE MOST valuable concession you are willing to offer, and beyond which you will not go?

EMPLOY THESE IMPORTANT STRATEGIES

Don’t Accept & Always Explore the First Offer -- It's easy to accept someone's first offer, but chances are you can do better. Also, the other party will probably feel better if they have to work a bit to get your agreement.

Anticipate -- What concessions do you think the other party will trade freely? How do you thing the other party will react to each of your concessions?

Timing is Everything -- Large, initial demands based on objective criteria generally lead to more favorable negotiation outcomes, because it will cause the other side to rethink their position ("Oh! We must have severely underestimated the amount of money it would take to do this deal. We better rethink our offer.") However, when you do make concessions, it is always better to make small, infrequent concessions. This sends the message to the other side that you are fairly settled on the value of your position. Also, skilled negotiators tend to make smaller concessions as a deadline approaches, again sending the message that you are not likely to move much more so if they were expecting something dramatic, they better adjust their expectations.

Once you get the feel for how and when to make concessions, you will begin to send amazing improvement in the results of your negotiations. Just remember, the secret is in planning everything in advance rather than trusting your "instincts" once you are at the table.

By James A. Baker
Houston, Texas

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