Negotiating Tip #1:
Calculating Concessions
In any negotiation, keep in mind: “what are the dollars at stake?”
That sounds like an easy principle, but it is not. Think of casinos: why do they use chips instead of dollar bills?
(Answer: so gamblers do not realize just how much they are putting up).
A common problem in business negotiations is that you are discussing cents per unit, and you forget that, with many thousands (or millions) of units involved, the difference of one penny may add up to a whole lot of money – and if your profit on the deal is going to be four cents per unit, then a one cent price change is going to be a 25% change in your profit. The rule is: always calculate how much a concession will add up in total dollars.