PurchTips edition #360<\/p>\n<\/div>
Allow me to share a story of my first $100,000 procurement negotiation, 20 years ago this month. I had just finished negotiating with a supplier. After weeks of back-and-forth, I got the supplier to agree to several favorable terms, including a price that was 20% below its original offer. I was excited to tell my boss about how effectively I negotiated.<\/p>\n
When I told him my news, I expected him to be pretty happy. But he looked up at me, stone-faced, and asked: \u201cIs that as low as they will go?\u201d I replied, \u201cWell, yeah.\u201d And he said, \u201cHow do you know?\u201d And I stumbled through my response, saying \u201cWell\u2026that\u2019s the price we ended up at\u2026when we concluded negotiations.\u201d And he probed further with \u201cHow do you know that they wouldn\u2019t be willing to go even lower if you continued the negotiation?\u201d I probably looked like a deer in headlights, because I didn\u2019t have a good answer for him! Maybe I didn\u2019t negotiate so effectively after all!<\/p>\n
So, how can you rate a buyer\u2019s negotiation effectiveness, to know when maximum value has been extracted from a negotiation? Here are two clues:<\/p>\n
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