What Suppliers Fear When Negotiating
PurchTips edition #298
Are You Aware Of Supplier Fears In Negotiations?
Fear. It's a powerful emotion that prevents people from doing what they want or compelling them to do what they don't want to do.
As humans, your suppliers' sales representatives have fears. Those fears come into play when they negotiate with you. And those fears can affect positively or negatively how effectively you negotiate with them.
Here are four supplier negotiation fears and how they can impact your negotiations...
Fear #1: Losing to a competitor. Suppliers hate when potential clients choose a competitor over them. If you make suppliers aware that you are evaluating multiple options, they are more likely to be more aggressive with their pricing.
Fear #2: Having your project canceled due to budget. Organizations and projects usually have finite budgets. When some projects can't be done within a certain budget, they are canceled. Sometimes, you can't play the "I'm talking to other suppliers" card. In those situations, telling suppliers that aggressive pricing is necessary for the project budget to be approved can be an effective alternative.
Fear #3: Failing to get their "foot in the door." Some sales organizations try so hard to land certain accounts. Often, spam filters, gatekeepers, and disinterested buyers make it hard for some suppliers to do business with certain organizations. So, when a desirable client contacts these suppliers, they worry about missing their chance to finally land the client. If it is difficult to get established as a new supplier for your organization, you might be able to use that to your negotiating advantage.
Fear #4: Losing face. When suppliers propose unreasonably high prices and later lower those prices dramatically, they worry about customers perceiving them as greedy and opportunistic. This fear can work against you in a negotiation. So, be careful how you describe an unacceptable price to the supplier who proposed it. Describing it too negatively like "a rip-off," "price gouging," etc. can make a supplier reluctant to prove you right.
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