Concession Management: The Art of Trading Value, Not Giving It Away

A CRO analyzed her team's negotiation patterns and found something disturbing: deals lost 18% of their value between proposal and signature. Not from competitive pressure. Not from market dynamics. From unmanaged concessions.

The pattern was consistent. Buyers requested discounts, reps granted them to keep momentum, deals closed with eroded margins. Nobody was teaching buyers that concessions cost something. The company was training customers that asking equals receiving.

Unmanaged concessions destroy 15-30% of deal value. Not through massive one-time giveaways. Through small concessions that pile up into serious margin erosion.

Companies that manage concessions strategically protect value while closing deals. Those that give casually watch margins evaporate.

Never Give, Always Trade

Every concession you make needs to be exchanged for something of value. This isn't optional.

Wrong: Buyer: "We need 15% discount." You: "Okay, I can do that."

Right: Buyer: "We need 15% discount." You: "I can adjust pricing if you'll commit to three years instead of one. Does that work?"

Why this matters:

  • Protects deal value
  • Teaches buyers negotiation requires reciprocity
  • Prevents racing to the bottom
  • Maintains value perception

Unilateral concessions signal weakness and invite more requests. Traded concessions signal that value costs something.

Diminishing Concession Sizes

Pattern your concessions to signal you're approaching limits.

First concession: 5% discount Second concession: 3% additional Third concession: 1% additional Fourth request: "I'm at my limit"

Why this works: Signals you're approaching bottom. Prevents expectation of equal concessions. Creates natural endpoint. Makes the final concession feel earned.

Equal concessions create the opposite problem. If you give 5%, then 5%, then 5%, they'll expect another 5%.

Get Something of Equal or Greater Value

Not all trades are equal. Value what you receive.

High-value gets:

  • Multi-year commitment
  • Larger scope or volume
  • Upfront payment
  • Reference and case study rights
  • Real contract terms (auto-renewal, price escalators)

Low-value gets:

  • Vague promises ("we'll consider expansion later")
  • Non-committal ("we might be a reference")
  • Already-expected stuff ("we'll pay on time")

Trade high-value concessions only for high-value reciprocation. Don't trade down.

Make Concessions Reluctantly

Make concessions feel valuable by granting them grudgingly.

Bad: "Sure, no problem, I can do that right away!"

Signals: More where that came from, keep asking.

Good: "Let me see what I can do. That's going to be difficult, but given your commitment to [reciprocal value], let me take it to my manager."

Signals: This was hard-won, probably near the limit.

Tactical reluctance:

  • Pause before agreeing
  • Express difficulty
  • Consult with others
  • Make approval seem challenging
  • Frame as special exception

Things that come easily feel cheap. Things obtained through effort feel valuable.

The Concession Planning Framework

Plan your concessions before negotiation starts.

Create Your Concession Inventory

Know what you can trade:

Price concessions:

  • Percentage discounts at different levels
  • Volume-based pricing adjustments
  • Multi-year commitment discounts
  • Early payment discounts

Payment term concessions:

  • Net 30 → Net 60 → Net 90
  • Quarterly → Annual billing
  • Payment schedule flexibility

Scope concessions:

  • Additional features or modules
  • Expanded user licenses
  • Geographic expansion rights
  • Additional integrations

Service concessions:

  • Upgraded support level
  • Dedicated resources
  • Enhanced SLAs
  • Additional training

Timeline concessions:

  • Accelerated implementation
  • Priority queue access
  • Extended evaluation period

Commercial term concessions:

  • Auto-renewal rights
  • Price escalation caps
  • Expansion pricing locks
  • Termination flexibility

Know what you can trade before negotiation begins.

Value Your Concessions

Assign value to each potential concession.

High-value concessions (protect these):

  • Price discounts >15%
  • Multi-year price locks
  • Uncapped liability
  • Termination for convenience

Medium-value concessions (tradeable):

  • 10-15% discounts
  • Enhanced SLA commitments
  • Payment term extensions
  • Additional features

Low-value concessions (trade freely):

  • <5% discounts
  • Reference/logo rights
  • Advisory board participation
  • Marketing cooperation

Trade low-value concessions for high-value gets. Protect high-value concessions unless you receive equal value.

Understand What Buyers Value Most

Different stakeholders care about different things.

CFO priorities: Cash flow (payment terms), budget fit (price), financial risk (liability terms)

Procurement priorities: Documented savings (discounts), favorable terms (flexibility), process compliance

Business sponsor priorities: Fast implementation, guaranteed outcomes, change management support

IT priorities: Security and compliance, integration support, technical resources

Something low-cost to you might be high-value to them. Find these asymmetries.

Extended payment terms cost you little if cash position is strong, but solve their budget timing problem. High value to them, low cost to you = perfect trade.

Plan the Concession Sequence

Map out your strategy.

Round 1: Small concession (5% discount) for small get (reference rights) Round 2: Medium concession (additional features) for medium get (one additional year commitment) Round 3: Larger concession (10% total discount) for larger get (three-year term + prepayment)

Escalate concession value only as reciprocal value increases.

Types of Concessions

Price Discounts

Most requested, most dangerous.

Discount discipline:

  • Never discount without reciprocal value
  • Use volume, commitment, or payment terms to justify
  • Make discounts feel earned
  • Document what enabled the discount

Discount tiers:

  • 0-5%: Minor concession, requires minor reciprocal value
  • 5-10%: Meaningful concession, requires significant reciprocal value
  • 10-20%: Major concession, requires major reciprocal value (multi-year, large scope)

  • 20%: Strategic deals only, executive approval required

Payment Term Flexibility

Trade cash flow timing for value.

Concession: Extend payment from Net 30 to Net 90

Get in return: Three-year commitment OR 5% higher price OR annual prepayment of Year 2

Costs you little if cash position is strong, solves their budget timing problem.

Feature Additions or Upgrades

Include premium features or additional modules.

Concession: Add Advanced Analytics module (costs you little to activate)

Get in return: Reference customer, case study participation, user group presentation

Features that cost you little but they perceive as valuable create ideal trades.

Service Level Enhancements

Upgrade support or SLA commitments.

Concession: Move from Standard to Premium support (costs you dedicated resource time)

Get in return: Larger user commitment, longer term, higher price tier

Caution: Service upgrades have real delivery costs. Don't trade these cheaply.

Contract Term Adjustments

Modify commercial or legal terms.

Tradeable terms:

  • Auto-renewal rights
  • Price escalation caps
  • Termination notice periods
  • Renewal pricing commitments

Must-protect terms:

  • Liability caps
  • IP ownership
  • Payment obligations

Trade medium-value terms for price or commitment protection.

Professional Services Inclusion

Include implementation, training, or consulting services.

Concession: Include $25K of implementation services at no cost (actual cost: $10K)

Get in return: Compressed decision timeline, reference commitment, advisory board participation

Services that cost less than their perceived value create trading opportunities.

The Reciprocity Principle

Concession trading depends on reciprocity psychology.

Always Get Something Back

Use conditional concession framework:

"I can [concession] if you're willing to [reciprocal action]."

Examples:

"I can adjust pricing to $165K if you commit to three years."

"I can extend payment terms to 90 days if you prepay Year 2 annually."

"I can include Premium Support if you participate in our customer advisory board."

"I can accelerate implementation if you provide a case study post-launch."

IF/THEN framing makes reciprocity explicit.

Never say:

  • "Sure, I can do that." (No reciprocity)
  • "Let me throw in [extra]." (Signals more available)
  • "No problem at all." (Devalues concession)

Use Reciprocity Ethically

When you give someone something, they feel obligated to reciprocate.

Use this ethically:

  • Provide value upfront (insights, tools, resources) to create reciprocity
  • Frame concessions as valuable gives that warrant returns
  • Make trading explicit, not implied

"We've invested significant time in building this custom ROI model for you. In exchange, we'd appreciate your participation as a reference customer."

Value provided creates obligation to reciprocate.

Concession Tactics and Patterns

Open with Strength

Start with strong opening position:

  • List pricing or ambitious starting point
  • Standard contract terms
  • Full scope offering

You can't concede from a weak opening position. Need room to negotiate.

Anchor high, justify thoroughly, defend confidently, concede grudgingly.

Control Concession Pacing

Don't rush concessions.

Bad pacing: First meeting: Make three major concessions Result: Buyer expects more, negotiation extends, additional requests appear

Good pacing: First meeting: Defend position, gather information Second meeting: Make small concession with reciprocity Third meeting: Make larger concession for larger get Final meeting: Close with final small concession

Slow concession pacing prevents racing to bottom.

Bundle vs. Isolate Concessions

Bundled (stronger): "If you commit to three years, I can adjust pricing to $170K annually, extend payment to 60 days, and include Premium Support."

Package deal—take it all or get nothing.

Isolated (weaker): Make one concession, buyer requests another, repeat.

Bundle concessions to prevent cherry-picking.

Make Concessions Conditional

Always frame as conditional.

Weak: "I can discount to $150K." Strong: "I can adjust to $150K if you can commit by month-end and sign a three-year agreement."

Conditions:

  • Time-bound ("if you decide by Friday")
  • Reciprocal value ("if you commit to three years")
  • Scope-bound ("if you maintain current scope")

Conditional concessions feel earned, not given.

Reject Strategically

Sometimes the right concession is no concession.

Buyer: "I need you at $120K."

Seller: "I understand the request, but at $120K, we can't deliver the value you need. We'd rather not do business than do it in a way that sets us both up for failure."

When to reject:

  • Request exceeds walk-away threshold
  • Request creates bad precedent
  • Request damages customer success probability
  • Request is purely testing

Strategic rejection signals: This is serious, there are limits, we're willing to walk away.

Common Concession Mistakes

Premature Concessions

Making concessions before buyer even asks.

Why it's bad: Signals weakness, leaves value on table, teaches buyers you give easily, no reciprocal value obtained.

Let them request, then trade strategically.

Unilateral Concessions

Giving concessions without getting anything back.

Why it's bad: Destroys value unnecessarily, teaches buyers concessions are free, invites additional requests, no reciprocal value captured.

"I can do that if you can do this."

Pattern of Easy Concessions

Consistently granting concessions quickly and easily.

Why it's bad: Trains buyers to always negotiate aggressively, creates reputation as easy target, destroys value across customer base, sets expectations for renewals.

Make concessions reluctantly, grudgingly, and conditionally.

Last-Minute Giveaways

Making large concessions at the end to close quickly.

Why it's bad: Unnecessary value sacrifice, buyer questions if they could have gotten more, bad precedent for future negotiations.

Plan concession sequence, stick to it.

Teaching Buyers Through Concessions

Your concession behavior trains buyers.

If you give easily: They learn to always ask, always push, always negotiate.

If you trade reluctantly: They learn negotiation requires reciprocity and effort.

If you're consistent: They learn your patterns and respect your boundaries.

If you're erratic: They learn to keep pushing because outcomes are unpredictable.

Every negotiation is training for the next one.

Strategic approach:

  • Be consistently disciplined
  • Always require reciprocity
  • Make concessions reluctantly
  • Maintain boundaries

Buyers learn to negotiate respectfully within reasonable bounds.

Approval Processes

Organizational discipline prevents casual value destruction.

When to Escalate

Approval threshold framework:

Rep authority: Minor concessions (0-5% discount, standard term adjustments)

Manager approval: Medium concessions (5-15% discount, payment term extensions, additional features)

VP approval: Major concessions (15-25% discount, significant term changes, multi-dimensional packages)

C-level approval: Strategic concessions (>25% discount, unprecedented terms, strategic deals)

Benefits: Prevents unauthorized value destruction, creates natural negotiation friction, ensures strategic oversight, maintains organizational discipline.

Use Approval Requirements Tactically

Approval as negotiation tool:

"I can approve up to 10% discount on my authority. Anything beyond that requires VP approval, which takes 3-5 business days and isn't guaranteed. If we can close at 10%, I can get this done today."

Creates time pressure, uncertainty about larger concession, incentive to accept reasonable offer.

Only use if approval requirement is real. Fake approval requirements damage credibility.

The Bottom Line

Concession management separates value-protecting deal makers from margin-destroying order takers.

Companies that manage concessions strategically never give without trading, make concessions reluctantly and in diminishing sizes, always obtain reciprocal value, teach buyers that negotiation requires mutual exchange, and maintain discipline through approval processes.

Those that give concessions casually watch systematic value erosion, train buyers to negotiate aggressively, set bad precedents, and destroy margins deal by deal.

Every concession is a choice: protect value or give it away. Choose wisely, choose consistently, choose strategically.

The difference compounds into millions in preserved enterprise value.

Master value protection? Explore pricing negotiation for margin defense and negotiation fundamentals for core principles.

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