In business, just about everything you do boils down to one simple question: How does it affect the bottom line? That is certainly true when it comes to your purchasing processes, and often the price you pay for anything you order can be a matter of negotiation.
If you can cut even a few cents from your per-item costs, the savings can be dramatic over time, so getting this aspect of your business right is critical to ongoing success. The following steps could help you find those savings and move toward greater success:
1) Do your homework
When you're negotiating with a supplier, you have to understand that they know the products you intend to purchase inside and out; you should be on that level as well, according to Purchase Control. The more you know about a given product, as well as similar offerings that could be more affordable, the better off you will be when it comes to finding a potential point of negotiation.
Along similar lines, it's certainly a good idea to make sure you check with other suppliers for a given product to get the best possible price, Purchase Control said. Even if this is a partner with which you have worked successfully for years, your primary concern should be saving money whenever you can, or at least leveraging other opportunities to get more out of an existing relationship.
3) Provide value on your end
Suppliers may be more apt to give you a better deal on a product they offer if there's something in it for them beyond the monetary transaction, according to the Harvard Business Review. Particularly if you are new to working with them, your ability to give them a new market to break into or otherwise expand their horizons, provide a steady ongoing partnership and so on could be seen as a huge advantage that fetches you a better price.
4) Consolidate your orders
As you do more business with a supplier, your ability to "buy in bulk" - whether for one product or many - can be invaluable, the Harvard Business Review added. If you can crunch the numbers and see if you can combine a number of smaller orders made with a handful of suppliers into one big one with a single option, you may find more wiggle room than you expect.
5) Look for an exact price
Often, when working with a supplier, they might give you a price range (for instance $1-2 per item) rather than a hard and fast number, according to Zycus. That can create an unpredictable and potentially unappealing scenario, making your cost per order dependent on potentially a number of factors. But if you can get a supplier to agree to a single price, a lot of that guesswork comes out of the process.
6) Know when to walk away
Finally, it's a good idea to go into a negotiation knowing what constitutes a "deal breaker," Zycus said. When negotiations hit that point, you should be fully prepared to take your business elsewhere rather than get roped into an unfavorable deal.