Budgets are stretched and scepticism about financial benefits from AI are growing. AI negotiation might be the only AI project you do this year which really does pay for itself (fast!) in a concrete and measurable way; we don’t deal in perceived improvements, intangible efficiency gains or process speed but focus on the real money. Perhaps this is how you grow your budget for 2026?
Below is the zero fluff guide to how our clients define and calculate the Return on Investment (ROI) for an AI negotiation deployment. (I will write more next week on common use cases and categories if you are considering starting out with AI negotiation soon).
Start by defining the process for AI Negotiation
The first step is to name the process being automated. You need a specific problem or process you want to solve with AI negotiation which happens a lot and costs you too much (either in time spent or in missed opportunities to negotiate). Do you do lots of RFQs against pre-agreed rate cards? Consider service contract renewals or high-frequency, low-value commodity purchases.
Framing the target use case around a process and a specific category makes it much easier to evaluate potential scale and repeatability.
Once the process is clear, record how often it runs. Some processes are campaign-based and happen once or twice a year. Others are repeatable but still manually triggered (e.g. RFQs) and some are always-on, embedded directly into workflow. Process frequency sets the upper bound of ROI. Campaigns on tail spend with 100’s to 1000’s of negotiations sometimes feel like the best starting point and can deliver fast returns but, if they only happen once every 3 years, they have a fixed ceiling in terms of outcome. Contrast this with improving daily embedded workflows to create ongoing value year on year.
Anything out of scope should be stated explicitly. Strategic suppliers, bespoke contracts, geographies where local regulation prohibits payment term negotiations, or small suppliers who are on more lenient terms. Situations requiring extensive legal input are usually excluded at this stage from a risk perspective.
Size the AI Negotiation opportunity
Opportunity sizing does not require detailed modelling. Two numbers are enough:
- how many events occur per year,
- the average $ value per event
You use these to determine the total value being negotiated and hence what saving might be possible. These figures define the maximum financial impact and help anchor expectations.
If the value in scope is small, the ROI will be small. If it is large and repeatable, the case for investment becomes much stronger. Although the temptation might be to start AI negotiation on smaller contracts and a small number of suppliers who “don’t matter too much,” if you make the scope TOO small you will not be able to get a return on your set-up costs.
We are often asked what % saving should you expect from AI negotiation? And I am afraid the response is “How long is a piece of string…?”
The answer depends on how tightly negotiated these terms were in the first place, have you revisited them recently, etc.
The best way to estimate it, is to expect at least the outcome you would expect from a person-person negotiation in this scenario. If you had all the time and people you needed, and you deployed a well trained human negotiator in this scenario, how much would you expect to save? If your answer is e.g. 4%, then this should be your target for AI negotiation to exceed. Nibble is designed by academics and negotiation experts; we expect it to be at least as effective as a well trained human negotiator.
Be honest about cost and complexity with autonomous negotiation
Next, capture the practical reality of deployment. This includes the level of IT integration required, but also the amount of internal effort involved from your team: finding the data, deciding on the exclusions and parameters, etc. All of this drives the number of weeks to first value.
We specialise in limited / no integration trials because this tends to be a stumbling block but clearly the deeper you integrate the easier it is to scale and automate and that’s were the highest ROI is achieved. It’s a balance! No integration will deliver faster payback, while deeper integration only makes sense when the underlying process runs frequently enough to justify it.
This step is about selecting the right starting point so you can see returns before scaling, and it’s not just IT, it’s also people and training and driving culture shift. Some teams love negotiation and this is the last piece of their job they would relinquish. Others avoid it altogether. Focus on thos teams, who have avoided negotiating at all and show them the benefits of bringing it back in a quick and easy format both procurement teams and suppliers love.
Determine a baseline to calculate AI Negotiation $ savings
Every ROI calculation needs a baseline, and only one should be used per use case.
Depending on the scenario, savings may be measured against the supplier’s initial offer, last year’s price, an agreed budget, or an external benchmark. The choice matters less than consistency. The baseline should be defensible and agreed before any pilot begins so everyone knows what success looks like. Sometimes its a saving versus inflation, sometimes its a reduction versus last year.
Calculate financial ROI on AI Negotiation
The financial calculation itself should remain simple. Start with an expected improvement per event, e.g. 2–5%. Multiply that by the number of events to arrive at annualised financial benefits. Where relevant, add cash impact from improved payment terms, calculated using days gained, total spend, and your cost of capital.
From the total financial impact, subtract the full cost of the solution. This includes implementation, licence fees, and any cost allocation from your internal effort. Financial ROI is then expressed as a multiple: total impact divided by total cost.
I include a worksheet for this at the end to make it easy for you.
Account for efficiency gains from autonomous negotiations
In many cases, the benefit of AI negotiation is not just financial savings but also time. Fewer emails, shorter sourcing cycles, and reduced back-and-forth all reduce effort per event. Recording time saved per negotiation and annual hours saved provides a clear view of productivity impact.
It is important to state how that time saved will be used or it isn’t gaining you anything! Common outcomes include handling more events with the same team, delivering faster turnaround to the business, improving supplier engagement, or gradually operating with smaller teams.
These effects should be acknowledged even if they are not fully monetised (yet).
Look for signs that value will compound
Some benefits do not show up immediately in a savings line. An increase in the proportion of events that include negotiation, shorter sourcing cycles, higher compliance with process, and more consistent negotiation behaviour are all indicators that value will grow over time. Suppliers adapting their proposals earlier in anticipation of negotiation is another strong signal. We strongly believe there is value in building a “culture of negotaition”
If everyone in your organisation expects to negotiate with suppliers and suppliers expect to be pushed for the best possible deal you will get more tailored and valuable proposals on the table from the start of the conversation.
Are you running a one-off project or building capabilities and growing capacity?
What happens next?
Every ROI case should end with a clear next step. This might involve expanding scope, moving from a campaign model to a repeatable process, or embedding negotiation directly into workflow. Defining this path keeps ROI focused on long-term value rather than risk getting stuck on isolated wins.
If you want the worksheet I have a version available – I will host this somewhere soon for self-serve downloading, but if you want it first fill out our contact form below and ask for a copy.
Just One More Thing (an AI Negotiation newsletter innovation for 2026)
In 2026 I am trying something new – a short final section called Just One More Thing. The idea is simple. One article or idea or podcast which is worth sharing. It will usually be a guest recommendation so let me know yours.
I couldn’t resist sharing this one just for fun at the start of the year because I worry many of you might have missed this important news from Australia which – like all great stories – has a happy ending about the pampered Dachshund in a pink collar who was on the run in Australia for 529 days… Priceless pluck from a wonderful Valerie the dog.
Next week, I have something more serious and AI negotiation / procurement focused already lined up for Just One More Thing… until then, be more Valerie and go out to conquer your new year resolutions!
Find out more from Nibble’s experience negotiating 100,000 times a month here.
Interested in Nibble’s AI Negotiation?
