10 Negotiating Tips to Get Better Deals from Vendors
Whenever you buy anything for your business, there is almost always an opportunity to negotiate on price and terms, and that applies to everything from office supplies to the rent on your business premises.
While some people relish the cut and thrust of a tough negotiation, others are not so comfortable with the idea. But hammering down a salesperson on price and getting better terms is not as challenging as you might think if you know to approach negotiations of this type. So, here are ten tips to help you get the best possible deal the next time you enter into a negotiation with a vendor.
1. Start with The Right Mindset
The first thing to remember when negotiating with vendors is that you are in the driving seat. There is, of course, a point at which the salesperson will walk away from a deal. However, you have more options, because you can choose to buy elsewhere. The salesperson, on the other hand, has only two options; close or lose the sale.
The second thing to remember is that most salespeople will be expecting a negotiation. Therefore, the first price on the table will be significantly higher than the minimum. So, don’t be bashful about getting a better price because that is what the salesperson will expect you to do.
2. Research the Market
It is always best to know what your alternatives are before you negotiate with vendors. So, research the market to identify what other products and suppliers are available and the cost of each potential solution.
Consider, too, what alternative means there might be to meet your requirements. Perhaps there is another type of product that will meet your needs. Or, is not buying anything at all an option? The more knowledgeable you are on the market, the more confident you can be when proposing a price that will be mutually acceptable.
It will also help to understand what the supplier’s cost of goods sold might be. Then, you can estimate the gross margin on the products you want to buy. For example, the immediate cost of supplying you with a software package a vendor owns will be minimal. So, you might get a low price for a quick sale. On the other hand, a reseller of products will have the wholesale cost to cover, so they may have less flexibility to offer a discount.
3. Shortlist Multiple Suppliers
It is always best to get several quotes for a purchase, even if you have already decided on a supplier. For one thing, one of the alternative quotes you get might change your mind about your selection. Having multiple options will also strengthen your position when you are negotiating a better price.
4. Sell the Benefits of Closing the Deal
Vendors are looking for benefits from the deal as much as you are. A supplier will want to see repeat income, for example. They will want to deal with creditworthy customers that will pay their invoices on time. A supplier might want to use your company as a reference, or perhaps there are other ways for you to promote the vendor’s business. So, sell why doing business with your company would be a good move for a vendor; convince them why you will make a great customer.
5. Work With the Salesperson
Ultimately, you and the salesperson want the same thing. You want to arrive at a price that suits you both for a product that will meet your needs. So, avoid falling into the trap of thinking that a purchase negotiation is an adversarial situation. Instead, try to work with the salesperson to find the price and terms that satisfy both parties.
6. Never Appear Desperate to Buy
While it is best to work with a salesperson, you must also keep your cards to your chest. So, even if you are desperate to buy a product fast, don’t let the salesperson know. It is also best not to give away the fact that you already selected a vendor as your preferred supplier. Remember, the salesperson’s job is to get the best price they can for their product. So, you will not get the best deal by appearing desperate to buy a product. In other words, you must demonstrate that you are prepared to walk away.
7. Take Your Time
You want to try to wear down the supplier without making them think that you have gone cold. So, take your time negotiating with vendors, but keep the process moving forward. Don’t respond immediately to emails, for example, and let the salesperson know that you are interested but still have some doubts. Eventually, if you play the waiting game well, the vendor will have invested so much time in you that they will be reluctant to let you go. So, you will have a better chance of negotiating a more favorable price and terms.
8. Explore All the Angles
If you appear to have hit an impasse on price, don’t forget that other aspects of a purchase can be negotiated. You might be able to get free delivery, for example, or extended credit terms might be on the table. Often, you can sneak an extra concession from a salesperson right at the closing stages of negotiation by bringing in one last minor condition of the sale.
9. Offer Something in Return for Concessions
The best deals are those that both sides walk away from feeling like a winner. So, keep something up your sleeve to offer in return for concessions. For example, suppose you have already decided to buy a product from a supplier. In that case, you could offer to sign the contract today in return for a final price reduction. Or, if your business operates from multiple locations, dangling the carrot of contracts to supply those locations might gain you a concession. Offering a down payment of deposit will also often win you a better price.
10. Commit to the Process
Finally, if a vendor thinks you are a time-waster, you will get nowhere. So, be willing to engage with the salesperson, and commit to the buying process. For example, allow adequate time for meetings and follow-up reference calls or attend site visits arranged for you. If you demonstrate that you are a serious prospect, it will make it easier to get the best deal.
In most B2B (business-to-business) purchasing scenarios, it would be a mistake to accept the first price you are offered. So, be prepared to negotiate from a strong position by having your alternatives lined up, and work with vendors to secure the best deal for you with which the supplier can also be happy. Don’t be afraid to be demanding while still being reasonable in negotiations, because it is unlikely that the salesperson is expecting anything less.