This phrase is used to introduce an offer that you make to someone. It actually makes the offer sound very generous and special. For example, if a teenager is begging you for help finding a job, you can answer like this:
I'll tell you what I'll do: I'll give my friend at the community center a call and see if they have any openings.
You can use this phrase in a negotiation like in the example above. You use it to offer a new price, or to add something extra to the deal. This phrase makes your offer sound like something extra that you're doing to be nice to the other person. Here's an example of where this phrase might show up in a negotiation:
A: How much do you want for it?
B: I'm asking $8,000.
A: $8,000, huh? That's a bit more than I was planning to pay.
B: Well, it's worth at least $10,000.
A: I understand, but I just can't go that high.
B: OK. I'll tell you what I'll do: I'll give it to you for seventy-five hundred, and I'll throw in the cover and helmet for free.