Case: 60 days and 20% off

A procurement letter with a big cut and a short deadline is usually an opening move, not a final verdict. Veloria's procurement lead asks for 20% off and 60 days to pay, with an answer "this week". Pavlo knows her: last year, for the safety course, she compared three offers and asked everyone for a big cut. Her job is to show a saving.

So don't panic, and don't accept "and make it up later". Discounts are hard to take back: once 640 is the price, every renewal starts from 640.

Instead, work from two files: Klasna's price sheet with its discount levels, the volume each needs, the give it requires and who approves it; and her request next to Klasna's standard terms. They show what each part of the request costs and which trades are possible.

A calm, numbered answer earns more respect from a professional negotiator than a quick yes or an angry no.

Start with the visible part: the discount. At list price Klasna keeps 800 − 430 − 31 = 339 UAH a lesson. At 640 it keeps 640 − 461 = 179.

Using the discount break-even volume, ΔV = d ÷ (m − d): the discount is 160 UAH a lesson, so ΔV = 160 ÷ (339 − 160) = 160 ÷ 179 = 89.39% more lessons just to earn the same contribution.

Check it in lessons: 300 lessons × 339 = 101,700 a month today; at 179 a lesson that needs 101,700 ÷ 179 = 568 lessons a month instead of 300.

Pavlo's reaction settles it: Veloria has forty people who need English, and nobody is going to nearly double their lessons. The volume that would pay for 20% doesn't exist, which is why the price sheet doesn't offer 20% at all.

Since the extra volume won't come, the honest way to show the discount is at the volume Veloria will actually buy: 300 lessons a month for twelve months, 3,600 lessons a year.

• At 800: 3,600 × 339 = 1,220,400 UAH of contribution a year.
• At 640: 3,600 × 179 = 644,400 UAH.

The difference is 3,600 × 160 = 576,000 UAH a year, handed over for nothing in return. That's almost half of what the deal would earn.

Numbers like this are for Marta's memo, not for the reply to procurement: Klasna's margins are Klasna's business. But they make the decision clear inside the team. A concession of this size would need a give of the same size, and nothing Veloria has offered comes close.

Note that this is still only the visible discount; the longer payment term adds its own cost on top.

Now the hidden part. Klasna's standard is 30 days to pay, and anything beyond needs Hanna's approval. Hanna's assumption for the cost of money is 24% a year, the credit-line rate, and the memo should say it's an assumption.

At list price a quarterly invoice is 900 lessons × 800 = 720,000 UAH. Thirty extra days on it:

720,000 × 0.24 × 30 ÷ 365 = 14,202.74 UAH a quarter, 56,810.96 a year, 15.78 a lesson, about 2% of the price.

Only the extra 30 days count: the first 30 are already in Klasna's standard terms, so it's wrong to charge the request with the full 60 (28,405.48 a quarter).

There's a cash side too. Quarterly invoices paid at 60 days mean Klasna pays tutors for months before Veloria pays. That belongs in Hanna's cash plan, and she checks it before approving the terms.

Procurement asked for 20% and 60 days. The two don't simply add up as percentages of price; what matters is how much contribution disappears.

On a 640 lesson, thirty extra days cost 640 × 0.24 × 30 ÷ 365 = 12.62 UAH. The total cut per lesson is 160 + 12.62 = 172.62, which leaves 339 − 172.62 = 166.38. The extra volume needed is 172.62 ÷ 166.38 = 103.75%: more than double the lessons, just to stand still.

Three tempting shortcuts are wrong:

• "terms don't change the price, so it costs the same as 20% alone";
• "20% + 2% = 22%, so 22% more lessons cover it" (it reads price percentages as volume);
• "89.39%, the same as the discount alone" (it ignores the terms).

Each part of a request has its own cost, and the costs compound because they all come out of the same 339.

Klasna's price sheet ties each discount level to a minimum volume, a required give and an approver:

• 3% (776): from 100 lessons a month, for a six-month commitment; head of Teams.
• 5% (760): from 200 lessons, for twelve months and a reference; head of Teams.
• 10% (720): from 300 lessons, for twelve months and quarterly prepayment; CEO and head of finance.
• 20% (640): not offered.

Veloria has the volume for 10%: 300 lessons a month. But it asks for 60 days to pay, the opposite of prepayment, so the 10% level is out: its required give turns upside down.

That leaves real trades: keep 800 and give longer terms for a firm commitment, or take the 5% level at standard terms. Reading the sheet row by row, volume, give and approver, stops you from offering a level whose conditions the buyer has just rejected.

The answer to procurement isn't a lower number; it's two options from the price sheet, each trading a concession for a give:

• Option A: list price 800, 60 days on quarterly invoices, for a firm twelve-month commitment; terms approved by Hanna. Cost to Klasna: 56,810.96 UAH a year.
• Option B: 760 (5%), standard 30 days, for twelve months and a reference; approved by Marta. Cost: 3,600 × 40 = 144,000 UAH a year.

Option A costs Klasna less and still gives the procurement lead a real concession to report. Option B exists because her saving may have to appear on the price line. Both are inside the rules, both trade something, and she chooses which one Veloria values more.

Not on the table: 10% with 60 days (it reverses the required prepayment), or 640 "if you sign by Friday" (not offered, plus invented pressure). A prepaid 10% is valid but unlikely to suit a buyer who asked for 60 days.

Declining part of a request is where bluffs creep in: "our CEO would never sign 20%" sounds firmer. Say only what's true: 20% isn't something Klasna offers, and here is what it can do and why. No invented boss, no "valid until Friday". A professional negotiator respects a clear rule more than a dramatic refusal.

Two more habits finish the job:

• Keep the champion informed. Copy Pavlo on the reply; if procurement says no to both options, he'd rather hear it from you than from her. Never go around him.
• Write the agreed option into the contract exactly. A concession that lives only in an email gets renegotiated at renewal.

Then, for Marta, a memo: numbers first (what the request costs), then the trade (A and B, who approves), then the words, with every figure checkable in the two files.

How it fits together: price each part of the request, see how they compound, trade within the price sheet, decline honestly, keep the champion close. Next module: partners and channels.