Tips on Negotiating

The bottom line is just the beginning

Aug 25, 2014
I have touched on this topic before but as a sales person I spend a lot of time discussing rates and meeting with people that want to lower their costs as much as possible and so I feel like it is worth addressing again.

Trying to lower costs is not unreasonable. We all want to pay as little as we can whenever we purchase a product or service, but there is a limit.  I find that while there is a mix of bargaining techniques used, there are two that stand out. One is the customer that understands that the vendor he is negotiating with is trying to make a profit as well. They want to make money to invest back into their business, to make their company even more successful, to offer their customers a better product, and to ensure their long-term survival.

Unfortunately, the other is the customer that only cares about the bottom line. He doesn’t do a serious evaluation of what he needs but rather sees the negotiation process as a game or competition, and his only goal, really, is to win, to feel like he got the better end of the deal. That’s really not a good strategy as, in the long term, it is usually not a win for either side. You may enjoy some short term benefits of lower costs, but anyone vendor that has to win by offering a lower price will eventually figure out a way to recover the lost revenue, or they will have to cut in other places where they can, such as in the value they offer.

This may be fine if you are getting some very generic product, but when you need fulfillment services, you are hiring a company to be a big part of your operation. They are going to be part of the impression that you make on your customers. Do you want them to feel from the start like they lost on the deal? That they are making such a thin margin on your business that the next time you ask for a favor, they have no motivation to do it?

Whether you are working with a fulfillment company, buying a car, or many other things that you negotiate on, be reasonable. Understand that no one can work for free and bare minimum profits will result in a bare minimum product or service. The biggest turnoff to anyone selling a product is hearing the first words out of a potential customers mouth that they need the lowest possible price. While this my be very important to you, you are wise to discover first what the vendor has to offer, how he can solve problems you need help on. He may bring solutions that are more expensive than you hoped but have the effect of lowering your costs more than you anticipated. Leave the talk about rates until the end.

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