Amid rising inflation costs, companies across the world are looking for ways to decrease their expenses in order to achieve higher profits. One of the best ways to do this is by renegotiating with suppliers. This doesn’t always mean getting the lowest possible prices, either. There are many components to negotiate including payment terms, delivery times, warranty periods, and product quality. It is important to negotiate with suppliers in a way that fosters long-term relationships while also benefiting your business right away. Here are a few helpful strategies for winning supplier negotiations.
1. Build a Strong Rapport
It’s always easier to do business with people you like. That’s why it is so important to build rapport. Excellent rapport leads to better relationships, better communication, and ultimately better deals. When you have a relationship with your suppliers that is attentive, communicative, approachable, and responsive, you are more likely to gain a competitive advantage when it comes to negotiating.
2. Promise Them Business
Suppliers are looking for the same thing as you: they want to get as much business as possible and they appreciate the customers who help them achieve those goals. When negotiating with suppliers, let them know that you are a customer who plans to give them repeat business over the long term. Let them know what they can expect from you and use past purchase history to provide a sales projection.
3. Look Beyond Price
If the supplier cannot budge on price, look for other ways to negotiate that can help lower your expenses. For example, you may be able to negotiate the terms of your contract or you may be able to negotiate a discount if you purchase in bulk. You may also be able to negotiate for faster delivery at no extra charge or for improvements on your warranty.
4. Compare Multiple Suppliers
As you would anything else, it’s important to shop around and compare pricing from different suppliers. Let each one know you are getting other quotes and explain that you are looking for the supplier that can offer the most competitive bid.
5. Offer Larger Deposits for a Bigger Discount
Another strategy is to offer higher deposits to your suppliers in return for a bigger discount. If the supplier knows they will get 50-60% of the total cost upfront, this can increase your bargaining power and they may be willing to discount the overall price.
6. Give Them All Your Business
If a supplier knows that they are getting all of your business, they may be willing to offer deeper discounts to maintain that valued relationship. If you are giving your business to multiple suppliers, consider transferring all of your business to one in exchange for better pricing.