Concessions in Negotiation: Strategic Move or Costly Mistake?

Let's talk about concessions in negotiation. You pull them out of the hat when things get sticky at the table.

But here's the thing we should not forget: concessions are a tool. Not a knee-jerk reaction. Not a magic wand to "secure the deal." A tool. And like any tool, they should be used purposefully, skillfully, and in alignment with your goals.

Yet, time and time again, I see negotiators treating concessions like confetti-throwing them around without much thought. Sometimes, they're not even aware of why they're doing it. Sound familiar?

Just give it to close the deal!

Here's a classic scenario: the other party demands a concession and threatens to walk away if you don't oblige. So, you concede.

Instinctively.

Automatically.

Maybe even out of panic. Why? Because no one wants the deal to slip through their fingers. Right?

But hold on. Is that really the right move?

At first glance, it seems logical. The other party has a better alternative, or so they claim. They're asking for a discount because someone else is offering more. It makes sense to concede and seal the deal, doesn't it?

Well, not so fast. Let's dig deeper.

The big questions

Do they really have a better alternative, or are they bluffing? Is that alternative truly better, or is it just a shiny illusion? Is their perception of the deal grounded in reality? Maybe they're testing your limits? Or perhaps they feel your uneasiness and smell blood?

Here's the fact: seasoned negotiators-whether buyers or sellers-will almost always ask for a concession. That's just Negotiation 101 for them. They may push for more even if they're already delighted with your offer. Why? Because it works. People cave in. Out of fear, out of desperation, or simply because they think it's necessary to keep things moving.

And that's where mistakes happen.

Not all concessions are equal.

Let's get one thing straight: not every concession is bad. Some are strategic and meaningful and pave the way to an agreement. But others? Useless and pointless. It's the equivalent of throwing spaghetti at the wall and hoping some of it sticks.

Why Make a Concession?

Before you hand over anything, ask yourself: What am I trying to achieve here? One should never give concessions blindly. Here are a few valid reasons to make one:

• To build trust and reciprocity. If all parties are giving something, it strengthens relationships. But it must go both ways.
• To signal flexibility. Caution is key here, especially with aggressive or competitive negotiators.
• To maintain or improve relationships. Ask yourself: does the specific concession actually improve the relationship? Or are you just assuming it will?
• To create value. It happens only if the other party gives something valuable in return.
• To signal fairness. This can be a psychological move, very subtle but effective.
• To test limits. If concessions are mutual, they can help you understand the other party's boundaries.
• To create momentum. Nobody likes a deadlock. A well-placed concession can break the stalemate.
• To empower the other party. Dangerous territory. Handle with care and skill.
• To reduce resistance. Small, calculated concessions can lower tension and smooth the path forward.

Reflection Time

Before you concede, take a moment. Ask yourself:

What's the specific purpose of this concession?

Will it create value for both sides?

Am I being rational, or am I reacting to their manipulation?

Concessions are powerful. But like a hammer, they can either build something amazing or smash everything to pieces. And it will sometimes cost you dearly. Use them wisely.

So, what's your next move at the negotiation table? Will you give in or take control?