7 Steps For Negotiating Optional Procurements<\/h3><\/div><\/div><\/div>PurchTips edition #311<\/p>\n<\/div>
Do You Follow These Negotiation Steps?<\/h4><\/div><\/div><\/div>For long-term, strategic relationships with suppliers, win-win negotiation is the preferred approach. However, a different approach is appropriate when your procurement meets these criteria:<\/p>\n
\n- The product or service is unique yet optional for your organization and only valued if it produces a return on investment;<\/li>\n
- The supplier is eager to sell the product or service, even at a discount; and<\/li>\n
- Pricing won’t affect product or service quality<\/li>\n<\/ul>\n
For this type of procurement, here’s a seven-step process that can get you the best deal when executed well:<\/p>\n
\n- Determine the maximum your organization is willing to pay for the product or service to make it “worth it.”<\/strong>\u00a0Don’t disclose to your supplier what this price is unless\/until you reach Step 6.<\/li>\n
- Request pricing from the supplier.<\/strong><\/li>\n
- Advise the supplier that its pricing is too high and ask it to offer its lowest price.<\/strong><\/li>\n
- Make an ambitious counter-offer.<\/strong>\u00a0By ambitious, I mean very low relative to the supplier’s last price. Your goal here is to make the supplier say something like “No, we can’t go that low” without offending the supplier so much that it will refuse to ever do business with your organization. If your supplier says “yes,” you are done negotiating and don’t need to go to anynext steps. But it also means that there may have been a lower price to be had.<\/li>\n
- Offer to “split the difference.”<\/strong>\u00a0In response to Step 4, your supplier will likely either make a counter-offer or restate its most recent offer. Assuming that the amount is less than or equal to the maximum your organization is willing to pay, offer to “split the difference” with the supplier and pay an amount that is exactly between your ambitious counter-offer and the supplier’s latest price. If the supplier agrees, ignore the next steps – your negotiation is over.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/spsm_verify.jpg\" "\\"spsm_verify\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services.jpg\" "\\"services\\"")
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
PurchTips edition #311<\/p>\n<\/div>
Do You Follow These Negotiation Steps?<\/h4><\/div><\/div><\/div>For long-term, strategic relationships with suppliers, win-win negotiation is the preferred approach. However, a different approach is appropriate when your procurement meets these criteria:<\/p>\n
\n- The product or service is unique yet optional for your organization and only valued if it produces a return on investment;<\/li>\n
- The supplier is eager to sell the product or service, even at a discount; and<\/li>\n
- Pricing won’t affect product or service quality<\/li>\n<\/ul>\n
For this type of procurement, here’s a seven-step process that can get you the best deal when executed well:<\/p>\n
\n- Determine the maximum your organization is willing to pay for the product or service to make it “worth it.”<\/strong>\u00a0Don’t disclose to your supplier what this price is unless\/until you reach Step 6.<\/li>\n
- Request pricing from the supplier.<\/strong><\/li>\n
- Advise the supplier that its pricing is too high and ask it to offer its lowest price.<\/strong><\/li>\n
- Make an ambitious counter-offer.<\/strong>\u00a0By ambitious, I mean very low relative to the supplier’s last price. Your goal here is to make the supplier say something like “No, we can’t go that low” without offending the supplier so much that it will refuse to ever do business with your organization. If your supplier says “yes,” you are done negotiating and don’t need to go to anynext steps. But it also means that there may have been a lower price to be had.<\/li>\n
- Offer to “split the difference.”<\/strong>\u00a0In response to Step 4, your supplier will likely either make a counter-offer or restate its most recent offer. Assuming that the amount is less than or equal to the maximum your organization is willing to pay, offer to “split the difference” with the supplier and pay an amount that is exactly between your ambitious counter-offer and the supplier’s latest price. If the supplier agrees, ignore the next steps – your negotiation is over.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div><\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div><\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
For long-term, strategic relationships with suppliers, win-win negotiation is the preferred approach. However, a different approach is appropriate when your procurement meets these criteria:<\/p>\n
- \n
- The product or service is unique yet optional for your organization and only valued if it produces a return on investment;<\/li>\n
- The supplier is eager to sell the product or service, even at a discount; and<\/li>\n
- Pricing won’t affect product or service quality<\/li>\n<\/ul>\n
For this type of procurement, here’s a seven-step process that can get you the best deal when executed well:<\/p>\n
- \n
- Determine the maximum your organization is willing to pay for the product or service to make it “worth it.”<\/strong>\u00a0Don’t disclose to your supplier what this price is unless\/until you reach Step 6.<\/li>\n
- Request pricing from the supplier.<\/strong><\/li>\n
- Advise the supplier that its pricing is too high and ask it to offer its lowest price.<\/strong><\/li>\n
- Make an ambitious counter-offer.<\/strong>\u00a0By ambitious, I mean very low relative to the supplier’s last price. Your goal here is to make the supplier say something like “No, we can’t go that low” without offending the supplier so much that it will refuse to ever do business with your organization. If your supplier says “yes,” you are done negotiating and don’t need to go to anynext steps. But it also means that there may have been a lower price to be had.<\/li>\n
- Offer to “split the difference.”<\/strong>\u00a0In response to Step 4, your supplier will likely either make a counter-offer or restate its most recent offer. Assuming that the amount is less than or equal to the maximum your organization is willing to pay, offer to “split the difference” with the supplier and pay an amount that is exactly between your ambitious counter-offer and the supplier’s latest price. If the supplier agrees, ignore the next steps – your negotiation is over.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div>
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
- Request pricing from the supplier.<\/strong><\/li>\n
- Determine the maximum your organization is willing to pay for the product or service to make it “worth it.”<\/strong>\u00a0Don’t disclose to your supplier what this price is unless\/until you reach Step 6.<\/li>\n
![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services-contracting.jpg\" "\\"services-contracting\\"")
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