How Giving in Too Easily Sabotages Your Bottom Line

Within every winnable negotiation, there is your position, your counterparty's position, and a zone of possible agreement between the two. Some negotiators think the way to reach this zone is to make large offers early. 

While this approach may seem efficient, it's actually a losing strategy. Giving in too easily can mislead and frustrate your counterparty while damaging your bottom line.

Concessions

When two parties reach an impasse in negotiation, offering a huge concession early on may seem like the best way to quickly win them over. This style of concession, however, can actually signal desperation. Your counterparty will generally expect a series of concessions. If you give ground too quickly, you may not have anything left to offer when negotiations stall again. This can leave your counterparty frustrated and disappointed. 

A 60% concession that's offered as 30%, 20%, and then a final 10% as negotiations draw to a close feels more natural and satisfying. It also gives you opportunities for logrolling, or trading concessions. The more space you allow between concessions, the more your counterparty is able to offer you in return. 

Some negotiators use concessions to signal good will and urge collaboration, but there are ways which cost far less. One key strategy is presentation. The contract you offer your counterparty should look great. Take the extra time to organize and arrange your contract for prime readability and appearance. An easy PDF compressor can help you create an easily organized and accessible file.. It costs you very little, but it sends a strong positive message to your counterparty. 

Counteroffers

It's difficult to prepare for a counteroffer as, by definition, your counter offer will be a reaction to whatever your counterparty requests. One thing to avoid is becoming anchored. This is when a low initial offer pulls negotiation in the direction of your counterparty. For example, if your counterparty suggests they pay $40,000, your counteroffer of $60,000 suddenly seems too large, even if it's a perfectly reasonable figure. The anchor tempts you to suggest $45,000 as a reasonable compromise, giving up a significant amount of value. 

Resist the anchor by making your counterparty fight for counteroffers. Asking them to defend their initial offer or even criticizing it directly can pressure them to adjust to an initial offer that's more in your favor. Giving your counterparty time to sit may encourage them to make an additional offer that works better for you. Don't feel pressure to start with unreasonable terms. You're not required to respond to an unfair offer with a counteroffer, even if it's the first one on the table.

Practice Collaboration

Even in a collaborative negotiation, your counterparty will be satisfied and trust more in the end result of a negotiation if they have to work for counteroffers and concessions.

If you're interested in working with local business leaders to protect your mutual interests, join your local chamber of commerce today.