Get More For Your Money – How To Negotiate With Your Suppliers

Last post: Oct 21, 2014

Negotiating with Suppliers is never easy, but it can save you a lot of money. We share some tips in this informational guide.

One of the key skills you need to work on in order to be successful in business is how to negotiate effectively. You want to get the best deal from your suppliers, it's only natural, and good negotiation skills can ensure that you don't erode your profit margin.

The aim of a successful negotiation should be to create a win-win resolution, one where both you and your supplier feel happy with the agreement. Negotiation is not about driving your supplier's price or package down to a level where they feel that they are losing out. That's not the best way to start and maintain a positive relationship, after all, you never know when you may need to ask your supplier for help to meet a tight deadline or to pull out all the stops in some other way.

So how do you go about carrying out effective negotiation with your suppliers?

Look for areas of mutual gain

As already mentioned, you should be approaching negotiations with a desire to create a mutually beneficial conclusion. How can you both gain from this, could you negotiate a discount with a promise to remain loyal to your supplier for a longer time period for example. Make sure you have identified all of the areas of mutual gain before your enter negotiations, this will ensure that you are on a strong footing.

Have an idea of the profit margins your supplier is working with

If you know roughly what the industry's standard profit margins are for the products or services your supplier is offering, you will have an idea how much the price being quoted can be played with. If profit margins are high then you should be able to agree on a mutually beneficial price. If not, what can the supplier offer that will make them stand out from their competitors and make you want to work with them, better payment terms for example. Likewise, what are you able to offer them as a customer to make you supplier feel better about the terms being discussed? Larger up front deposits, higher sales volumes that other customers, etc...?