Saying "no" is one of the core skills everyone should know how to use!
The major thing to remember is that in addition to saying "no" it is wise to provide an alternative solution and explanation to why this is a better path to get the result. A lot of guys tend to forget that. And we get those awkward situations when parties are unable to come to an agreement.
One of the recent experiences I had is a meeting with one of our software vendors when we inquired about new features for a series of their product. We initiated the communication.
We wanted some additional functionality of their newer product to cut down our costs.
They wanted to make more money by skyrocketing the price on the licenses and re-evaluating our current agreement.
It was obvious from first 5 minutes of coversation.
And because it's a meeting (Truth about meetings and managers revealed!) with managers - we ping ponged the dicussion around for 40 minutes.
Now, the suffering could have ended in the first 5 minutes by saying - "no", "goodbye", but since it's a touchy subject we went around on some examples and tried to get the exact numbers that their solution is offering and how it will impact the planned cost reduction we had in mind.
The numbers didn't add up, as it turned out the price in licensing cost increase the vendor requested was more than the actual value their new line of product brough into our organization.
Ultimately they promised to get back with a better offer and they still "plan" to.