We’ve found that you can usually express “No” four times before actually saying the word.
The first step in the “No” series is the old standby:
“How am I supposed to do that?”
You have to deliver it in a deferential way, so it becomes a request for help. Properly delivered, it invites the other side to participate in your dilemma and solve it with a better offer.
After that, some version of “Your offer is very generous, I’m sorry, that just doesn’t work for me” is an elegant second way to say “No.”
This well-tested response avoids making a counteroffer, and the use of “generous” nurtures your counterpart to live up to the word. The “I’m sorry” also softens the “No” and builds empathy. (You can ignore the so-called negotiating experts who say apologies are always signs of weakness.)
Then you can use something like “I’m sorry but I’m afraid I just can’t do that.” It’s a little more direct, and the “can’t do that” does great double duty. By expressing an inability to perform, it can trigger the other side’s empathy toward you.
“I’m sorry, no” is a slightly more succinct version for the fourth “No.” If delivered gently, it barely sounds negative at all.
If you have to go further, of course, “No” is the last and most direct way. Verbally, it should be delivered with a downward inflection and a tone of regard; it’s not meant to be “NO!”