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Here, Tradeindia's members can exchange ideas and ask for help on trade-related issues. To participate, you must be a member of Tradeindia.com. We have assigned moderators to facilitate these discussions. |
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Posted on 7th September 2007 at 14:49:00 |
Mr. Sandip Chhettri
Karki Brother
New Delhi, India
Free Member
Joined :07/01/2004
No of Topics Posted : 25
Reply/Comments : 19
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TOPIC : Negotiating price with the Buyer
Whats's the best way to give a quotation to a buyer. Should i give a higher price first and after series of meeting bring the price down. Is it a good idea to bargain with the buyers. As a supplier how should i start, while negotiating price with the buyer so that i can get the order.
Looking forward for your feedback and opinion.
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Posted on 12th September 2007 at 10:25:00 [Message #682
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Mr. Himanshu R. Jani
INTERNATIONAL SALES MANAGER
DGP WINDWOR INDIA LIMITED
Mumbai, India
Free Member
Joined :12/18/2003
No of Topics Posted : 0
Reply/Comments : 1
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Re: Negotiating price with the Buyer
Prudent Points to ponder on this topic are as under:
# It is better to keep margin equivalent to market trend prevailing in region where one is dealing with
# This shall help to include some cost component which Bayer used to ask after completing deal
# Also helpful while customer is negotiating on negotiated price
# Some time another decision taker is involved during the phase of transaction and situation also ask for satisfying his ego!!
# Nonetheless it should not be higher so that customer either runs away or drop the project
Outcome - It is not the subject which is available in Marketing /MBA'S Curriculum but one has to earn it through series of experience....Even though " Jo Jita Wohi Sikandar... "
Himanshu Jani
Manager - International Sales
Middle East & CIS Countries
WINDSOR MACHINES LIMITED
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Posted on 12th September 2007 at 11:08:00 [Message #683
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Mr. David Jarvis
Emsodur AG
Domat, Switzerland
Free Member
Joined :05/30/2007
No of Topics Posted : 0
Reply/Comments : 1
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Re: Negotiating price with the Buyer
In my experience this depends on a number of factors.
1. The culture in which you are dealing, by this I mean is it part of the local culture to negotiate price. If yes, start high and negotiate down, but only to a level with which you can still keep the margin you need.
2. Negotiate all other factors out of the way first.
Very often other factors are important to the customer. Quality, customer service, delivery terms etc. All of these points should be dealt with first and only after all these points, (there maybe others!) have been dealt with should price be negotiated. It may well be that the customer will be prepared, although he wont admit it, to pay a slightly higher price if one aspect of the supply "package" gives him a benefit over that which he currently enjoys.In such cases price is not so much of an issue.
3. It depends on the product. If yours is the only product he can use then a fair price should be offered.
If your product is one of many which can be used then the law of competition applies. The supplier offering the best all round package of quality, service, price etc will win.
4. The type of product you are selling: For example:
If you are selling high value technical equipment the price is not top of the list. Usually other factors are more important, reliability, technical back-up, guarantees etc
If on the other hand you are selling something like a consumable e.g. paper clips then price is more important.
Don't forget price is often not the most important factor for a purchaser.
Once you are in the situation to really negotiate the price (all other aspects like quality etc having been covered) then the culture of the customer should be considered, haggling can be offensive to some customers, with others it is part of the game.
In both cases only negotiate to a point where your required margins are still acceptable.
Good luck
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Posted on 12th September 2007 at 14:34:00 [Message #684
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Mr. Niranjan
C.E.O.
Shanti Krishna Enterprise
Bhopal, India
Free Member
Joined :07/04/2003
No of Topics Posted : 0
Reply/Comments : 1
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Re: Negotiating price with the Buyer
In my opinion negotiating price with a buyer depends on following important factors in a contract:
1. Number of suppliers available
2. The quantity to be purchased
3. Duration of Supply
4. Payment terms of buyer
5. Who is the buyer, Government or non Government
The number of suppliers available will define whether the seller has to squeeze his margins or can retain it. Generally when I as a buyer call various sellers for negotiations, we first take up on our own cost analysis (breakdown prices of components) of a product if it is possible, otherwise we compare the same with other offers available or prevailing market prices. Discussion on this aspect cover quality also as these days no supplier will like to be disqualified on this factor (most suppliers maintain quality) eg. XL size Shirt generally should be priced at above Rs 200-250 if ne 1 is offering the same in 50 it must be bad quality
Secondly Quantity being purchased is another factor wherein the margins can be adjusted according to the demand. If buyer quantity is more suppliers can get their raw material in bulk(cheaper as compared to small qty purchase)resulting in more margins
Thirdly duration of supply also affects margins as long deliveries means more carrying cost compared to less inventory held for short duration eg components of cars bought by Maruti from their suppliers. Here the demand is such that there is continous movement of product from ancillary to Maruti so that none needs to stock items for longer duration (JIT)
Payment terms play a major role in margins, if a supplier gets his payment in time, he need not pay interest on his purchases. Cash is available to him at less cost. In a large contract like construction of bridges, part payment facility as per completion of segments if available the contract can be executed faster making it cheaper than estimated
Lastly if buyer is government, then various other incentives are available like ED and taxes waived off for defence supply etc
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Re: Re: Negotiating price with the Buyer
It is not good to give higher prices and reducing all the times.Buyer may loose credibility on you. Cost table approach is the one which will give you more realistic approach.
If u are in Manufacturing industries you know what is your input cost material(You know the norm/unit of production)You add your manufacturing cost and over heads + profit.Also note your working will be different for different volumes.
When you work input material cost,collect cost from the best source. Apply scientific approach.Please note Negotiation is becoming Price agreement.
L.N.Raghavan
Consultant
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