I hope that you have enjoyed the article \u201cHow Supplier Pricing Is Determined.\u201d<\/p>\n
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In the article, I covered five of the ways that suppliers arrive at the pricing they charge your organization.\u00a0 Some buyers may question \u201cWhy should I care about how suppliers set their pricing?\u201d<\/p>\n
The answer is simple:\u00a0 because understanding the psychology behind the pricing will help you determine the best negotiation strategy.<\/p>\n
For example, if a supplier uses \u201cInput Cost & Markup\/Margin Strategies,\u201d you will only have so much room to negotiate because you are digging into the supplier\u2019s margin and, at some point, it may be more advantageous for the supplier to walk away from the business than to concede to your lower pricing demands.\u00a0 In such a case, it may be a better strategy to augment your approach with collaborating with the supplier to identify input costs that can be reduced so that the supplier can maintain its same margin percentage, but still be able to offer a lower price to you.<\/p>\n
In a contrasting example, if a supplier uses \u201cSales Goals\/Quotas\u201d to determine its pricing, the supplier may have a lot of flexibility with its pricing so you should ask probing questions and listen to the supplier\u2019s response to get clues on how hard you can push for a better deal.\u00a0 This type of questioning-listening-acting approach is detailed in Chapter 7 of my book, The Procurement Game Plan<\/i>.<\/p>\n
So, back to that question:\u00a0 why should buyers care about how suppliers set pricing?<\/p>\n
Because it helps them be better negotiators!<\/p>\n","protected":false},"excerpt":{"rendered":"
I hope that you have enjoyed the article \u201cHow Supplier […]<\/p>\n","protected":false},"author":12,"featured_media":4104,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n