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Strategy 2: Ask for Pricing based on Quantity Tiers

No supplier will provide their best price in the first interaction. The initial price quoted by suppliers could be around 20% to 30% higher than their best pricing, especially if you are a new customer. Hence, you need to be shrewd and try to find out what their best pricing is. Of course, you can’t do this by just simply asking them directly – you have to think smart and make them disclose their BEST PRICING RANGE instead. Then, you will be able to roughly gauge what is their best price.

To do this, one of our favorite methods is to request three quantity price breaks. For example, if our intention is to order 1,000 units of the product, we will request the suppliers’ quotes based on 500, 1,000 and 5,000 units of the products. Doing this will allow us to quickly discover what their true pricing is, and at the same time make suppliers think we have bigger long-term plans.

Below are 2 scenarios of how this may work out. Let’s say we are considering 2 suppliers for a product, and we obtain this information:

From the data, we can see that Supplier A does not offer much of a price change. This probably means that the pricing they offered is probably close to their best pricing, and it will be tougher for us to continue negotiating.

However, Supplier B’s quotes show that there is more price change based on different quantity tiers. This indicates that there’s still probably more room for negotiations. Most likely, the supplier will want to gain your business – and hence for the larger price change if you order more units. Supplier B is actually more incentivized to get the sale instead of selling you the products at their highest price. So, you should use this to your advantage when making your orders.

Interested? Stay tuned as we introduce you to more negotiating strategies with suppliers!

Check out the other Strategies for Negotiating with Suppliers here:

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