Negotiating a contract with a vendor can be even more difficult than making the deal in the first place. It requires a different strategy altogether. That’s because getting a company to agree to use your products and services is only half the battle. Once you have convinced them to work with you, you may still have to negotiate the terms of the contract. Small businesses, especially, may lack the funds and resources of a large operation and must therefore master the art of successfully negotiating with vendors. They must find a way to source their supplies while also gaining maximum revenue. This requires ingenuity, flexibility, and the art of successful negotiations. You may not be able to control every aspect of pricing with your vendors, but you can increase profit margins by strengthening your supplier relationships. Consider the following tips for negotiating the best rates with your vendors.
Sell Yourself as Someone Valuable
Vendors are just like any other business- they want to sell as much of their product or service as possible. When negotiating a price with your vendors, let them know that you plan to be a repeat customer who will be bringing regular business their way over the long term. Give them an idea of how much you plan to purchase from them and projections for long term purchasing. This can give you some leverage to negotiate better pricing.
Think Beyond Price Alone
If the supplier is unable to budge on price, you can still negotiate other things that can help lower your overall expenses. For example, you might be able to negotiate a lower down payment, a discount for purchasing in bulk, or free shipping costs. You can sometimes even receive a discount for early payment. Take some time to think outside the box and consider all of the terms before agreeing to a price.
Define Your Priorities
It’s essential to write down a list of what is most important to you prior to negotiating with your vendor. This will help you set clear goals and devise a strategy for meeting those goals. A few things to consider are price, delivery time, payment terms, shipping costs, maintenance agreements, and value for the money. Before you negotiate, draw up a detailed plan of which items are most important to you.
Don’t Accept the First Offer
You should never accept the first offer, but rather make a low counter offer in return. The other party will likely come back with a revised number. You also want to ask about additional costs such as repairs, maintenance, shipping, expedited delivery, etc. This is the time to use your bargaining power. For instance, try asking for bulk discounts if you are a large buyer. You can also tell the vendor you need time to look over the contract and you will get back to them. Never allow yourself to be pressured into making a quick decision.
Be an Easy Customer
At the end of the day, sometimes it all comes down to relationships. Regardless of how much business you can give your supplier, they won’t want to work with you if you are a problem. It’s important to be considerate of their needs as well and seek mutually beneficial agreements so you can maintain a good supplier relationship. If you treat the relationship like a partnership, it can really pay off for you in the long run.
