Why is the supplier’s quotation far from your target price?

By justchinait
January 28, 2021

Most of the time, after receiving a quotation, customers will say that the price is too far from my ideal price, so they don’t consider it. Or the customer has given a target price, which is far from the supplier’s price. How could this happen?

Suppliers often think that customers are bargaining prices. Is there any other reason?

Of course there will be, suppliers must first eliminate these factors before bargaining with customers:

1. The customer has entered a completely new industry

The customer has never entered this industry before, and does not know the market situation of this industry, just reply to a price to find out the details of the supplier.

We have encountered this kind of customer, we quoted 1870usd/mt, and the customer responded 1500USD/mt. The profit of the product is not so high at all. Even if the tax rebate is fully included, we will lose a lot, so we replied decisively and refused, and listed the “cost” for him. Later this client actually made a deal with us. In the ongoing conversation, we learned that this customer only occasionally saw the inquiry of this product, and sent the inquiry with the attitude of giving it a try.

2. The information the customer has is out of date or wrong

This situation is often encountered, and some websites allow sellers to mark prices. Many people wrote the price on the website but did not update it in time. This will lead the buyer wrongly.

Also, the customer may insist on the price of the last purchase, thinking that the price has not changed, but in fact, the price has increased substantially.

3. The same product, but different models or specifications or content

We know a supplier who sells resin and the product is very good. Previously, this product was in liquid form, which was not easy to transport and store. There are not many companies in China that can make powdered resins. There are a lot of inquiries, but every time the price is quoted, the customer does not reply. A customer replied: Are you sure there is no wrong price? Your price is 8000 RMB, but our target price is 3000 RMB!

The supplier said that it is impossible to make a mistake about the product. This product does not have other models and specifications. It must be in liquid form. Later, we asked the customer whether it was in liquid form, and the customer was sure that it was powder.

The supplier asks the customer what the product is used for, and the customer feedback makes the supplier more sure that the customer is lying, and the price cannot be so low!

Months later, a Polish customer came to visit and the supplier realized after chatting that 100% of the original powder is not needed for some purposes, and the content required is very small. Just add other ingredients, and the price will be greatly reduced! The supplier suddenly realized that Chinese buyers bought it and mixed it on their own, so they had not encountered these problems. Foreigners didn’t want to mix it by themselves, so they would need a low content, already mixed resin!

4. The supplier miscalculated the price and cost, or the profit increased too high!

This does not seem to need to be explained. When customers say that the price is high, the supplier first checks whether there is a problem with their price.

5. There are new factories, suppliers enter this industry and compete for the market at low prices

In this case, the customer can find other factories to take samples for testing to determine whether the product quality is similar, and then decide whether to change the supplier. Production can’t be stopped, and customers will definitely have some scruples about the new factory’s volume and process.

Therefore, when the customer’s target price is far from the supplier’s quotation, don’t rush to conclusions. First, find out if there are any of the above problems before further negotiations!

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