How to negotiate for the best cost from Supplier

In running a business, supply costs are one of the major factors associated with it. Cost defines the size of your business, potential profit, selling price, and potential growth. One of the best ways for your business to succeed and grow is to learn how to negotiate for the best cost from the supplier. And to do so, negotiating for a discount should be your number one agenda. However, negotiating for a cost cut is not a walk in the park, it takes skill, diplomacy, and a preparation. So here are the best ways to do so:

Focus On Communication Skills 

Of course, negotiations can’t be done in a win-win situation without good communication skills. Almost every business is dependent on suppliers that’s why your approach to them is very important. Be professional but at the same time friendly. Do your homework about the supplier and approach them in a friendly way of showing interest. But remember not to praise them too much. It will give them the impression that you need them instead of they need you. 

When choosing your supplier, it is best to provide them an RFQ form. RFQ stands for Request for Quotation. It is a document that you want the suppliers to fill-up to get the pricing, payment terms, and other information relative to their product. If you don’t know how to do it, better do some research about it. Sending an RFQ form to your supplier will show them that it isn’t your first rodeo when it comes to negotiation. It will also provide them a hint that you are also asking other suppliers for your business. This will effectively show them that they need you instead of you needing them– which will potentially lead to a lesser cost of the supplies.

Then, once the first negotiation is done and you are happy with your supplier, be attentive and responsive to them always. You need to be building rapport and trust for future discounts.

Be Loyal

Both you and your suppliers are businessmen. If you show loyalty to them by providing repeat business, they will do the same and even make ways to keep you with them such as providing more discounts.

Show Sign of Willingness

Suppliers are always keen when it comes to negotiating for the cost. They want to know if you are a long term business, and a trusted one. So it’s best to show them that you can provide a larger deposit. For suppliers, it’s best to have a large deposit for a lower-priced order than a small deposit for a higher-priced order.  

Be Punctual

Always show them that you mean business. Suppliers hate those who don’t pay on time as much as you don’t like those who don’t provide on time. So, to get better deals from them and maintain a good relationship, always pay on time, do what you said that you will do, and don’t miss.

Counter Offer and Meet Half-Way

Once you have built rapport and connection with your supplier, negotiations for discounts are inevitable. Sometimes they will offer it first. If they do– don’t accept it. Create a counteroffer that you think will still be a win-win situation for both sides. If the supplier does not agree, then try to meet half-way. On the other hand, if you offer it first, there’s a possibility that they won’t accept it right away too but rather they will create a counteroffer. Don’t accept it until you meet halfway for a more winning situation on both sides.

See also:AVOID COMPLICATED BUYING PROCESS

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