Negotiation Skills for Entrepreneurs: Concessions, Trade-Offs, and Value Creation

Concessions, Trade-Offs, and Value Creation: What This Chapter Focuses On

In negotiation, a concession is anything you give (price, time, scope, risk, exclusivity, payment terms, rights). A trade-off is an exchange: you give something they value in return for something you value. Value creation happens when you reshape the deal so both sides get more of what they want—often by trading items that are low-cost for you but high-value for them (and vice versa).

The goal is not to “never concede.” The goal is to concede without giving away value by making concessions deliberate, conditional, and tracked.

Rules of Concessions (Small, Slow, Conditional, Documented)

1) Small: Reduce the size of each give

Large concessions reset expectations and invite more demands. Use smaller moves to test whether the other side reciprocates.

• Instead of: “We can take 15% off.”
• Try: “We can adjust pricing slightly if we also adjust payment timing or scope.”

2) Slow: Don’t concede quickly

Speed signals you had room all along. Slow down concessions to gather information and to make each move feel costly.

• Pause to evaluate: “Let me run the numbers and see what’s feasible.”
• Use staged movement: “If we can align on X today, I can revisit Y.”

3) Conditional: Never give without getting

Make concessions if-then statements. This trains the negotiation into a trading pattern rather than a one-way discount pattern.

Continue in our app.

• Listen to the audio with the screen off.
• Earn a certificate upon completion.
• Over 5000 courses for you to explore!

Or continue reading below...

Download the app

Conditional language patterns:

• “If we do that, then we’d need…”
• “I can consider X provided we also agree to Y.”
• “We can move on price when we lock in term length / volume / payment schedule.”

4) Documented: Capture every concession in writing

Documentation prevents “concession amnesia” (where your give is forgotten but their ask remains). It also protects delivery teams from scope creep and prevents renegotiation later.

• Summarize in email after each call: “Here’s what we agreed and what’s pending.”
• Update the proposal/contract redlines immediately.
• Use a concession log (template below) so you can see the full cost of the deal.

Creating a Concession Plan in Advance

A concession plan is a pre-built menu of what you can trade, in what order, and for what return. It prevents improvising under pressure.

Step-by-step: Build your concession plan

1. List negotiable variables (not just price). Examples: scope, timeline, payment terms, contract length, renewal terms, support levels, onboarding, exclusivity, IP rights, reporting, SLAs, minimum order quantity, cancellation terms.
2. Estimate cost-to-you vs. value-to-them. Mark each item as: low/medium/high cost to you and low/medium/high value to them. Your best trades are low-cost to you, high-value to them.
3. Set your “concession ladder.” Decide the sequence: what you can give first (small), what you can give later (only if you receive meaningful value), and what you will not give.
4. Define required reciprocity for each concession. For every give, write the “get.” Example: “Discount of 5% requires annual prepay” or “Faster timeline requires reduced deliverables.”
5. Pre-write conditional phrases. This reduces hesitation in the moment. Keep 3–5 ready lines your team uses consistently.
6. Assign internal approval thresholds. Example: “Any discount > 7% needs CFO approval” or “Any scope change needs delivery lead sign-off.”

Example: Simple concession ladder (illustrative)

Bundling Terms: Trade Packages, Not Single Items

Bundling means you group multiple terms into a package so the other side can’t cherry-pick concessions. It also helps you link “gives” to “gets” without sounding defensive.

How to bundle (practical steps)

1. Identify the 2–4 terms most important to you (e.g., price, timeline, scope clarity, payment timing).
2. Create two or three bundles that are each acceptable to you but optimized differently.
3. Present bundles as choices to shift the conversation from “discount” to “which package.”

Example bundles (client services)

• Bundle A (Speed): 4-week delivery, fewer deliverables, weekly check-ins, full price.
• Bundle B (Value): 6-week delivery, full deliverables, standard check-ins, small discount with upfront payment.
• Bundle C (Flex): 8-week delivery, full deliverables + one add-on, price held, milestone-based payments.

Script: “We can absolutely optimize for speed or for total deliverables. Here are two packages—tell me which fits your priorities, and we’ll lock it in.”

Trading Low-Cost Items for High-Value Gains

Many entrepreneurs over-focus on price because it’s visible. Often, the best value is created by trading on dimensions that are cheaper for you than discounting.

Common low-cost (to you) items that can be high-value (to them)

• Certainty: faster signature, guaranteed capacity, reserved inventory
• Convenience: simplified invoicing, consolidated reporting, dedicated point of contact
• Risk reduction: clearer acceptance criteria, pilot phase, performance checkpoints
• Timing: flexible start date, phased rollout
• Visibility: case study, testimonial, referral (only if it truly helps you)

Common high-cost (to you) items to protect

• Open-ended scope, unlimited revisions, broad IP transfers, strict SLAs without fees, exclusivity, deep discounts without commitment, rushed timelines without compensation.

Trade-Off Examples in Real Entrepreneur Scenarios

1) Client scope trade-off: Reduce deliverables for a faster timeline

Situation: A client wants the project delivered in 3 weeks instead of 6, without changing price.

Bad concession: Agreeing to the faster timeline and keeping the full scope (you absorb overtime, quality risk, and opportunity cost).

Value-creating trade: Speed is expensive; scope is adjustable. You trade deliverables for timeline certainty.

Step-by-step approach

1. Confirm the priority: “Is the 3-week deadline the top priority, even if we reduce deliverables?”
2. Offer a scoped-down option: “We can hit 3 weeks if we focus on the core deliverables and move the rest to Phase 2.”
3. Bundle it: “Option 1: 3 weeks, deliverables A+B only. Option 2: 6 weeks, deliverables A+B+C+D.”
4. Document acceptance criteria: Define what “done” means to avoid rework.

Concrete example: A marketing site build: deliver 5 pages + core integrations in 3 weeks; move blog templates, advanced animations, and SEO migration to Phase 2 with a separate change order.

Conditional script: “If we commit to the 3-week launch, then we’ll need to reduce the deliverables to the essentials and lock content delivery dates from your team.”

2) Vendor contract trade-off: Longer commitment for lower unit cost

Situation: You buy components/software/services from a vendor and want a lower unit price.

Bad concession: Asking for a discount with no give (vendor has no reason to move) or accepting a discount that adds hidden risk (e.g., strict minimums you can’t meet).

Value-creating trade: Vendors often value predictable revenue. You can trade term length or volume commitment for unit cost, while protecting yourself with performance and exit terms.

Step-by-step approach

1. Propose a commitment that is real: “We can commit to 12 months / 24 months.”
2. Ask for a specific unit reduction: “In exchange, we need unit cost to drop from $X to $Y.”
3. Add protection clauses: service credits, quality thresholds, delivery SLAs, and a termination right for repeated failures.
4. Bundle payment terms: “We can do quarterly prepay if you hold pricing and include priority support.”

Concrete example: “If we sign a 24-month agreement with a minimum of 10,000 units per quarter, then we need a 12% reduction in unit cost and a clause that allows us to exit if on-time delivery drops below 95% for two consecutive quarters.”

3) Partnership trade-off: Equity vs. responsibilities

Situation: A potential partner wants equity to join your venture.

Bad concession: Giving equity for vague promises (“help with growth,” “introductions,” “advice”). Equity is expensive and hard to reverse.

Value-creating trade: Equity should be exchanged for defined responsibilities, measurable outcomes, and time commitment—often with vesting tied to delivery.

Step-by-step approach

1. Define the role in operational terms: sales targets, product ownership, hiring responsibilities, customer success, fundraising, etc.
2. Quantify expectations: hours/week, KPIs, deliverables by date.
3. Structure equity to match performance: vesting schedule, cliffs, milestone-based vesting, repurchase rights if they leave.
4. Bundle governance: decision rights, board/advisor role, information rights, and dispute resolution.

Concrete example: “We can offer 3% equity vesting over 24 months with a 6-month cliff, provided you lead partnerships and close 6 channel deals by month 12, attend weekly pipeline reviews, and own onboarding for those partners.”

Conditional script: “If equity is part of the package, then we need clear responsibilities, measurable milestones, and vesting tied to delivery.”

Concession Log: Template to Track Requests, Gives, and Gets

Use a concession log during the negotiation (and keep it attached to the deal file). It helps you avoid accidental giveaways, ensures reciprocity, and creates a clean handoff to delivery/operations.

How to use the log (practical steps)

1. Log every request immediately (even if you say no).
2. Write the proposed concession and its cost (time, money, risk, complexity).
3. Write what you require in return (commitment, scope reduction, prepay, longer term, reference, etc.).
4. Mark status: proposed / accepted / rejected / pending.
5. Link to documentation: email summary, redlined clause, updated proposal version.

Concession log template

Practical Language: Concession Moves You Can Reuse

Make the concession conditional

• “If we adjust that, what can you adjust on your side?”
• “I can do X provided we lock in Y today.”
• “We can move on price when we have clarity on scope and term.”

Slow down and protect value

• “Let’s separate what’s essential from what’s nice-to-have, then we’ll price it fairly.”
• “I want to be careful not to agree to something that creates delivery risk—can we look at options?”

Bundle to prevent cherry-picking

• “I can offer that as part of a package: if we do A and B, then we can do C.”
• “Here are two options—speed vs. scope. Which do you prefer?”

Common Concession Traps (and How to Avoid Them)

Trap: Unilateral discounting

Fix: Convert discounts into trades (term, volume, prepay, reduced scope, fewer revisions, longer timeline).

Trap: Trading away flexibility (scope, IP, exclusivity)

Fix: Put a price on flexibility: change orders, tiered pricing, limited licenses, or time-bound exclusivity with minimum guarantees.

Trap: “Just this once” extras that become the new baseline

Fix: Document as one-time, define boundaries, and tie to a reciprocal commitment.

Trap: Forgetting earlier concessions

Fix: Maintain the concession log and recap frequently: “So far we’ve adjusted X and Y; the remaining open item is Z.”