In order for your business to flourish, you need to buy and sell your products at a price that will give you a good profit margin. However, this may not be possible every time and you might have to negotiate your prices with your suppliers and customers.
The tips given below will help you negotiate better prices, leading to increased profits for your business.
Study Your Suppliers
Study the market inside and out. When negotiating with your suppliers, get prices of their competitors to make comparisons. Select suppliers with a long-standing history of quality products and timely deliveries, because your reputation depends on your suppliers delivering quality items on time, every time.
Be a little flexible when negotiating with your suppliers, but do not lose sight of the big picture. You must make a decent profit margin when you sell the product.
Handle your suppliers carefully; do not get into arguments or fights with them, even if you cannot agree on the price - because in the future, you will probably need to deal with them again.
If there is a very small difference in price, try to negotiate on the terms of delivery, such as free delivery to your business or favorable payments terms such as a longer credit period. Understand that your suppliers also need to make a profit, so negotiate a price that is fair to both of you.
Be Tactful With Your Customers
When you're negotiating with customers, it might be trickier, since a little bit of ego might be involved on both sides. Handle your customers with care. If necessary, you can reduce your prices to show that you are respecting your customer's views. Check your competitor's prices, so that you know the exact difference in price for products and services similar to yours.
Different customers have to be handled differently, so it is important to get into their mindset to understand their point of view. But for customers with doubtful payment records, do not negotiate your payment terms, however rosy their potential business may seem - because if you make a sale and then have to spend time trying to collect payment, you'll end up losing money.
Be firm yet polite with your customers while negotiating. You have to make them feel that they are getting the best price for the product or service that they are purchasing. Explain to them the extra benefits of your product or service if your rates are higher than similar products on the market.
This explanation should be based on precise facts, so as to convince your customers to pay more. In retail sales, most merchants cross out the original price of the product and print the reduced price below. This tells customers that they are getting a better deal, without them having to negotiate on the price.
Whatever you do, do not get personal with your suppliers or customers. Keep it professional. Negotiations are part of the cost of doing business. Do not turn it into a battle of feelings. The key word when negotiating is flexibility.
Negotiating is an art that has to be mastered. It means that both parties involved should get the feeling that they got the best deal possible.