4 tricks for asking suppliers to cut prices

By justchinait
December 22, 2020

Buyers often have to face a difficult problem. That is to buy good goods at a cheap price. But how to do this?

The supplier’s situation has a huge impact on the company’s marketing activities, such as raw material price changes, shortages, etc., will affect the price and delivery date of the product. Suppliers are not only opponents in business negotiations but also partners. How should we lower prices with suppliers? The following content teaches you to lower prices with suppliers:

1. Murder a person with a borrowed knife

Usually, there may be 3-7 supplier quotations after inquiry. After quotation analysis and review, they are arranged in the order of high and low quotations (price comparison). In this process, we will be faced with whether we should start with the highest quotation or the lowest quotation? Whether to find the lowest quotation to negotiate the price? Should we negotiate with each supplier who is quoting? There are no standard answers to these questions and it depends on the specific situation.

If you negotiate with the quotation supplier one by one, I am afraid it will be time-consuming. And the more suppliers negotiate. The more troublesome it is to decide. If you only start bargaining with the supplier with the lowest quotation, this supplier may be arrogant, and the willingness to lower the price may not be high.

If time is limited, negotiate with the second-lowest quotation. After discovering the limit of its reduction, the third-lowest quotation will be found to negotiate the price. After these two bargainings, the “floor price” can emerge.

If this “floor price” is lower than the original lowest quotation, indicating that the third and second-lowest quotations are quite willing to cooperate, then the original lowest quotation can be negotiated. According to the “floor price” after the third and second price cuts, the lowest is required to fall below the “floor price” to achieve the purpose of “Murder a person with a borrowed knife”.

If the original lowest quotation is unwilling to reduce the price, it can be handed over to the second or third lowest to be traded at the lowest price after negotiation. If the original lowest price just falls to the lowest price of the second or third lowest, the principle is to hand over the order to the original lowest price.

2.Overcome all the difficulties in the way

Generally, suppliers will not automatically reduce prices, so purchasers must strive for reasons. However, the willingness and extent of suppliers to reduce prices depends on the object of the negotiation.

If the purchaser is not satisfied with the result of the price negotiation, he should ask his superior to negotiate with the supplier (salesman). When the buyer raises the bargaining level, the seller feels respected and may agree to increase the price reduction.

If the purchase amount is huge, the purchaser may even request a higher-level supervisor (such as a purchasing manager, or even a deputy general manager or general manager) to invite the seller’s business supervisor (such as a business manager) to have an interview, or directly have the buyer’s senior supervisor and the other party Of senior executives talk directly, which usually works well.

3.Gather parts into a whole

Only the supplier knows the true cost or reserve price.

Therefore, especially when the product to be purchased is composed or assembled from several different parts, you can ask the supplier to “divide into parts”, list each part, and quote one by one; also ask the professional supplier of these parts to quote. The supplier’s quotation is used to seek the lowest single quotation or total price as the basis for negotiation.

4.Pressure to cut prices

In the case where the buyer is dominant, the supplier is required to reduce the price in a coercive manner without consulting the supplier. This is usually a killer tool used to improve the profitability of the supplier when the product is in poor sales or the competition is fierce, resulting in losses or meager profits.

Due to the downturn in the market, suppliers’ inventories have been overstocked, making suppliers eager to ship goods in exchange for working capital.

Of course, such drastic price cuts will destroy the harmonious relationship between supply and demand. When the market improves, the suppliers who were wronged in the past will either “retaliate” to raise the price or seek another development, and the supply-demand relationship cannot be maintained for a long time.

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