Concession

A concession is anything you give up to move a deal forward. A lower price is the obvious one. Longer payment terms, extra work, a faster start or a free month are concessions too. Each one costs the business money or effort, even when the invoice total stays the same.

Most concessions happen at the proposal and decision stages, when the customer compares options. In a CRM they usually live in a note or in the final price field, so they are hard to see. Give them a home: a short field on the deal that says what was given and what came back.

List price $10,000 and a 10% concession: the customer pays $9,000, and $1,000 comes straight out of margin.

Review concessions in the weekly pipeline review, deal by deal, for everything at the decision stage. The head of sales asks two questions: what did we give, and what did we get for it. A concession with nothing in return is a gift, and gifts teach the customer to ask again.

The owner looks at concessions once a month through margin. A seller sees one discount on one deal. The owner sees what all the discounts did to profit per deal. That view decides whether discount authority needs a tighter limit or whether prices need a review.

Concessions are what a trade-off is made of. Price anchoring sets the starting point, so every concession is measured against the full price. Discount authority sets how far each seller may go alone. Margin shows the real cost of each concession on the proposal.

• Giving a concession before the customer asks. A seller who opens with a discount loses the room to trade later. Present the full proposal first and wait for the customer to name what stands in the way.
• Counting only price cuts. Free extra work and long payment terms also cost money, yet nobody tracks them. Record every concession in the same field, whatever its form.
• Giving in small steps without a limit. Example (invented numbers): five steps of 2% end at 10%, and nobody approved 10%. Agree the total limit before the talk starts.
• Hiding concessions in notes. If the reason lives only in a seller's memory, the next deal starts from the same discount. Write what was given and why in one line on the deal.

By Friday, the head of sales takes the deals won in the last month and lists every concession on them. Include price cuts, extra work, payment terms and free periods. Next to each one, write what the customer gave in return, or leave it empty. Bring the list to the next pipeline review. Agree on one rule to test for a month: no concession without something named in return.

Six areas of the job on one map, with a self-assessment and a plan for your first month.