Jul 29, 2020 | Blog
When it comes to negotiations, it isn’t all about getting the right price. That’s certainly a part of it, but there’s a whole lot more to the practice than you might realize at first glance. It’s a complicated dance where you need to decide payment, delivery time, and a variety of other important factors that can help determine the success of your business and your partnership. Like any other dance, though, there are always some ways to increase your chances of getting it right. Here are 5 tips on how to negotiate with suppliers.
1. Have Set Objectives
You may want to roll your eyes at this as setting objectives is kind of a given when it comes to negotiation process management. Try to resist it for a moment, though, because most of us aren’t quite as good with this step as we believe ourselves to be. In addition to setting a wanted price in your mind, you also need to consider other things including:
Maintenance agreements or other after-service arrangements
Payment method, frequency, etc.
Contract length
Delivery arrangements
Quality and quantity expectations
Until you get clear with yourself about these aspects, your negotiations with suppliers will be missing some essential discussions.
2. Know Your Supplier
We’ve talked about this in previous posts and with good reason. Knowing your supplier, or literally anyone you’re negotiating with, is a necessary step if you want the process to go well. Recognizing their needs, leverage, and ability to pay/meet demand will allow you to make offers that are fair them while still prioritizing the health of your business.
3. Don’t Reveal Your Hand
What does poker and supplier negotiations have in common? You should never show your hand in either of them. It may sound cynical or cold, but drawing up good contract terms is a game of skill and tactics. If you reveal all the concessions you’re willing to make too early, your odds of receiving a stellar offer are significantly lower. Always show goodwill and that you’re approaching things seriously, but never freely offer up info that can be used against you – and certainly not at the very beginning.
4. Never Accept the First Offer
It should go without saying, but the first offer is always the weakest and/or most outrageous of the bunch. In the vast majority of negotiations, it’s not meant to be a serious one. Instead, it’s there to set the benchmark for what’s wanted and give a point that you and your supplier can work down from. Don’t accept it. Just make a low counteroffer and go from there.
5. Insist on a Written Contract
The negotiation process is just the mean to an end: the contract. When you finally reach these final stages, don’t let yourself go for convenience above thoroughness. Yes, verbal contracts are technically legally binding, but they are also far from bulletproof. They allow space for misunderstanding and they’re incredibly difficult to rely on in court. Protect yourself from these issues and opt for a written contract. A good supplier will have no qualms here as it provides security for them, too.
About Intellext™
Intellext is an AI startup that is revolutionizing the way contracts are negotiated, accelerating time to close, and improving deal terms. Intellext’s Intelligent Negotiation Platform™ eliminates the complexities of contract redlines and stakeholder collaboration and optimizes deal terms by applying machine learning during the negotiation process.