Negotiating and Influencing Pricing With Suppliers

December 26, 2023


If you are a business owner, you may not consider yourself a negotiator, but you are. Much - if not in most - of your time is spent in some form of negotiation. Therefore, there is no skill more essential for a business owner or manager to fine tune than the ability to negotiate successfully.

Whether you’re dealing with customers, suppliers, or prospects, you’re involved in this complex challenge we refer to as negotiation. The success of your business is largely dependent on your negotiation skills. In this article, we’re going to break down the negotiation process into four fundamental steps so you have a better idea how to approach this sector of your business.


Diagnosing the Situation

The first step in preparing yourself from a position of leadership is to thoroughly diagnose the specifics of the situation. Who are the players, or possible participants? The key elements to a negotiation may seem fairly obvious, and maybe they are, but not always. There might potentially be participants in the background that play a role in influencing the outcome. Additionally, there may be new participants that enter the equation and influence the discussion.

Know from the beginning if the person you’re dealing with has the authority to make the deal. Before you even begin a discussion, close in on the least you’re willing to accept before entering the agreement. This value should serve as a benchmark, and keep it clear in your mind as the discussion progresses. This will prevent you getting so caught up in the moment that you decline a better alternative detail that’s preferable than the position you turn down.


Shaping the Structure

As soon as you have diagnosed the situation and have a clear understanding of the issues that need resolution, the players involved, and the rules to be followed, it’s time to form the structure of the negotiation process. Key elements, including the issues agenda and the participants, are not fixed in advance but are influenced by the negotiators and their observations.

The biggest mistake a lot of business owners make is approaching the discussion as though the game is fixed. People have a tendency to focus excessively on what the results will be based on what’s on the table and not enough on influencing the discussion that leads to those results. It’s important to pay attention to everyone who is and possibly could be involved in the negotiation alongside the issue itself and how to frame the situation.


Managing the Process

The third step you should reach in breakthrough negotiations is the need to determine the best way to proceed with the face-to-face negotiations. Part of this step includes sensitivity to first-time interactions, as this will affect everything that occurs from that point forward. Mutual respect from the very beginning increases the chances of an agreement, whereas a negative initial exchange. 

You’ll want to avoid attempting to reverse a concession once it has been made. Any curveball that erodes trust will be likely to provoke irreversible changes in the minds of the other participants’ attitudes.


Results Assessment

As soon as negotiations begin, you’ll want to step back occasionally to assess how well you are doing. Your natural inclination will be to do this between negotiation sessions, and this is a good practice. However, another good practice to incorporate into your negotiation routine is to “go to the balcony”, in other words, look at your situation from a distance in the heat of the battle.

The ability to appraise an ongoing negotiation is crucial in assessing whether you are meeting your own goals. Keep those objectives clear in the forefront of your mind as you proceed. It is inevitable that one party in a negotiation will be more active than the other in trying to control the agenda. In this instance, the last thing you want to do is approach this as a fixed game, allowing the other party to channel the flow simply by default. Rather, be certain that you are an active participant in this important sector of the negotiation process.

Don’t lose another job! Charter Estimating has over 300 years of combined experience, and at the top in the electrical industry. We have successfully bid hundreds of electrical projects ranging in value from a few thousand dollars to over several million dollars. Reach out to us today!


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