In the midst of dealing with other priorities, businesses tend to give negotiations a back seat. It may be the case that they put full trust in the first pricing scheme proposed to them by suppliers. Either that or they only agree to it so that they can start moving product faster.
But the same business also stands to lose a lot of money because they didn’t save enough of it at the negotiation table. There will be a number of missed opportunities in figuring out leeway or other terms for negotiation aside from pricing. There may also be some “what ifs” about how they approached suppliers, and if they did so from a place of goodwill.
If you’re a business owner, don’t let this be the case for you. Take the opportunity to learn more about the art of negotiation. Level up your negotiation skills so that they will help you in maintaining your purchasing objectives, as well as balancing your purchasing and cost. Moreover, use these skills to nurture a positive and mutually beneficial relationship with your suppliers.
Here are some important tips that you can use for your next round of negotiations.
Do Some Research on the Cost of Production
Take the time to research online so that you can arrive at your own ballpark estimate for the cost of production. It would also be good to calculate an average based on prices that multiple suppliers will give you. Once you have an estimate, you’ll also have the foresight to determine which deals are too expensive. It’ll also be a good basis to have when you’re choosing and confirming a contract with a new supplier.
Don’t Agree to the Very First Offer That You Receive
Don’t fall into the trap of thinking that the first price given is the right one. Saying yes to the first offer right away, even if it means getting the product out faster, isn’t necessarily the most profitable move. You have other alternatives at your disposal. Tell your supplier that you will think it over, ask outright about any wiggle room, or make a counter offer based on your estimate.
If the Supplier Can’t Budge on the Price, Negotiate for Other Things That Will Lower Your Expenses
Will the supplier only agree to doing business if prices are fixed? Take a parallel approach and try to negotiate other things. One option is to negotiate a lower amount for down payment. You can also do the opposite by promising a larger deposit for a bigger discount, so that the suppliers worry less about their accounts receivable. There’s also the option of asking for a discount for every product bought in bulk. This goes to show you that even if price can’t be negotiated, other cost-saving terms may be.
If You Find a Trustworthy Supplier, Entrust One More than One Income Stream to Them
Instead of getting a supplier as a source for a single product, see if you can source several other products from them. If they’re promised more business with you, there’s also the chance that you’ll receive more perks and greater discounts across the board. This may seem like a risky move, but it will work if you find a reputable supplier with a proven track record. It may also be less stressful for you in the long run, as your supply stream for several products is ensured.
Give the Supplier Good Reason to Do Business with You
In exchange for the fairest offers, propose what you can do for the supplier. Argue that you can serve as their gateway to a new, untapped market. Proffer the chance of your loyalty and a long-term supply contract with them. In other words, show why doing business with you will merit the cost on them.
Put Your Best Foot Forward
Lastly, be a good client to your supplier. Always be honest about the kind of business situation you’re in. Communicate with them in an open, polite, and friendly manner. And above all, keep your obligations to them once you’ve entered in a contract—pay your bills on time and coordinate your schedules. Treat your relationship with your suppliers as a long-lasting and worthwhile partnership.
This kind of negotiation savvy, paired with an earnest desire to find what’s best for both parties, will pay off big time. Now that you have these tips on hand, you can roll up your sleeves and start negotiating.