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Using Effective Negotiation Skills To Help You Bargain A Reduced Price
A Purchasing Manager for a large multinational company considerably improved his negotiation skills and outcomes by asking a simple question most within the industry now faces. What can we do right now to instantly reduce our buying spend within just one specific area of the business?
It was critical for him to achieve a significant reduction on their existing spend without compromising the high quality or quantity of the products, services and solutions being supplied. Anyone who have had some negotiation training, will immediately recognise some of these principles.
1. Meticulously explore all alternatives available to both you and your counterpart.
You should have a good understanding of what will take place if you don't realize the improvement in price that is needed. Can you buy from another provider? Are you able to sell more of your product or service to alternative clients? Can your client buy from another supplier?
What percentage of your supplier's business is depicted by the volume of transactions between your respective organisations and so forth. Knowing what both you and your counterpart may do if negotiations are unsuccessful will assist you to understand the balance of power. You may even discover a better alternative to renegotiating the price!
2. Slightly overstate your business needs
You have to ask for more than you need to get. If you need to achieve a 5% increase on your price, then you should be seeking a 7% increase. Asking for more than you need to get enables you to make a concession to your counterpart. Nobody wants to negotiate with someone that is rigid and inflexible and if you are not prepared to make any concessions, then it is definitely unlikely that your counterparts would make any specific concessions.
3. Emphasise similarities
As humans we are more likely to be influenced by those who are perceived to be similar to us; effective sales training endorses this. Whether or not you need to obtain a price reduction from your supplier or a price increase from your customer, emphasise the similarities between yourselves and between your company & theirs. For example, just like you and your colleagues at DEF Company, we at LMN Company also have considerable pressure on our input costs and operating expenses. This has made it imperative that we adjust the price of the product.
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