responding to outrageous demands

It's important to bear in mind that just because a customer asks for something in a business negotiation, it doesn't mean you have to respond.  Buyers sometimes make truly outrageous demands, but that's no reason for you to go back to headquarters to ask for whatever it is they're demanding.  The important thing to remember, regardless of how outrageous the request may be, is to not get emotional about it. 

What to do instead is simply ask for a trade in return.  Eventually, your customer will begin to understand that trading is good for both sides, and that they're likely to get more of what they want if they're willing to trade with you.  The number of margin-reducing concessions two people can make may be small, but the number of value-creating trades they can make is limited only by time and their creativity!