The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters.
The less expensive pump isn't, if you have to airfreight the late shipment. The circuit boards aren't cost effective if you have a 30% scrap rate. The new crane might cost more to ship from Japan, than the sticker price alone. These are all lessons we learn in life starting at an early age with " the loaf of bread on sale isn't a good deal if you have to drive across town to get it".
Inexperienced buyers sometimes make the mistake of starting each new contract negotiation by focussing on a lower price? Starting this way can sometimes sour the rest of the negotiation and/or distract you from looking at other important aspects of the agreement. If the selling price is part of an established rate structure then the salesman might become defensive or argumentative and the resulting discussion will be less than congenial. And of course, the obvious potential problem; "It wouldn't be the first time everyone was so happy the price was settled, that another important element of the transaction was completely forgotten."
An alternate strategy might be to leave the obvious discussion about price until last. Talk about all of the other aspects of the transaction which have to be "right" in order for the price to be a good one. Take advantage of the elements where the salesman might have some flexibility or be creative. Work on making the deal the best you can, then talk about price.
Now that both parties completely understand all the aspects of the agreement, the pricing discussion can be based on concrete facts such as who pays the freight; does there really need to be special packaging, delivery schedule, etc. There are a lot of contractual elements to consider negotiating, and it is a good idea to use a checklist so you don't forget any. You can find a list of issues to consider including in a contract negotiation at http://www.mltweb.com/tools/what.htm
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|Copyright; Michael L. Taylor, C.P.M.|
|Last Updated: 11/26/2016|