To make the most of the deal every penny, whether it’s a walk through the market, get a discount from an online store or supply of expensive industrial equipment — you need to be calm, persistent and resilient in conflict situations. In order to effectively argue their position during the bidding, to save money for the company or family budget, you need to be able to choose the right logical arguments and be able to convey them to the seller.
Perseverance and reasoning are the key elements of EDO-analysis tool, which is used in their work, professional purchasers. EDO stands for “Essential-Desirable-Optimal” (an Extreme position — Desired position — Optimal position). Before starting to bargain, the purchaser/buyer has to predict possible scenarios and outcomes of the negotiations: from the “extreme case” to the “ideal desired”.
Buyer/buyer prior to negotiation need to examine the seller/supplier and to collect a maximum of information and products. It is necessary to formulate a goal and to occupy a selected position according to the EDO-analysis. Of the selected position will depend on the company’s profit or satisfaction with the transaction.
Consider the following example: your task is to purchase raw materials in a certain volume, with a budget of 300 thousand UAH. But this does not mean that you have to buy it for 300 thousand UAH! Using EDO-analysis, you divide its negotiating position on the three options: the extreme position of 100 thousand UAH. desired — 150 thousand UAH. and the optimal price for the purchase of 250 thousand UAH. The seller, of course, also did not miss — it will guide your strategy will be exactly the opposite.
In order to support your position with facts and concrete options, you need to carefully analyze the market, manufacturers of similar raw materials, distributors, vendor-specific features, which will be able to negotiate. Search the web, ping people, ask for specific offers and discounts!
The purchaser should always remember that he affects the profit of the company. The main factor of quality earnings — reducing the cost of production. Example:
The proceeds from the sale of your finished products — 1 million UAH.
Costs 850 thousand UAH.
Profit is UAH 150 thousand. on consignment.
Product profitability 150/1000*100=15%
Objective — increase profit up to 200 thousand UAH. That is 50 thousand UAH. or 30%.
There are two solutions: To keep the same sales volume (1 million UAH.), reducing the cost of 50 thousand UAH or up to UAH 800 thousand. (5.9%); For the same level of profitability (15%) increase in sales due to the growth in turnover of up to 1333 thousand UAH. or also by 33.3%.
Thus, net profit of 33.3% can be achieved either by decreasing the cost of just 5.9%, or by the growth of prices by 33.3%. Obviously, to bargain, to minimize their costs, easier and more profitable than to raise the price and increase sales. Increasing its price, there is a risk that you might end up with no sales. (By the way, by the same logic, reason and your suppliers).
Here 12 life hacks for those who want to succeed in the art of bargaining and be a successful buyer: Never show enthusiasm with the seller. It must be remembered that the seller pay for what he sells. Because in the beginning of the meeting, always be skeptical. Always react negatively at first to the price. No need to admit that its price is lower than competitors, even if this price fits your budget. This does not mean that you have to know the seller or to guess at your reaction. Genuinely be surprised the offered price, ask more questions about the factors for such pricing. Always ask for the impossible. If you do your requirements seem to be impossible, for the opponent they can be quite feasible. By requiring a greater you’ll create a field for negotiations, and will be able to compromise. Thus your opponent will appear the impression that he was able to successfully negotiate. Never take the first price. Which means the first price? This is the maximum price from the seller! Agreeing with her, you are missing an opportunity to reduce the cost and improve the conditions of calculation. Tell them they will have to do a lot better. This way you will be able to achieve the best quality, this applies not so often, but should sound when discussing price. Always say that you need to consult a manual. This will allow you to make the right decision in a calm atmosphere. After taking the solution from the negotiations, you do not leave any escape routes. Be smart, but play the fool. The more you listen to your opponent, the more chances you have to get more information. Say for example that you do not understand any of the terms and ask them to repeat, and thus there is a chance that the opponent can say more than they planned, or something extra. Never go to the concessions without demanding something in return. If you every time you go on assignment, to ask in return, then the opponent will not have much desire to ask again. Always be prepared to adjourn the debate. If you have already made the decision, the terms of the contract you are satisfied, or the conditions of the calculation, but the opponent is not yet fully agreed with this and offers to continue negotiations, at this point you need to stop the discussion. In this case, guilty for not signing the contract is the seller. Play one of the “good” and “bad”. This is often applicable tactics, the talks always be friendly, but leave room for “bad”. It doesn’t have to be really bad, but still you may not agree with the proposed terms, referring to the fact that your boss never agrees that he will not go on such an assignment. Always remember that 80% of concessions are made at the last stage of the negotiations. Spend 20% of scoring problems that are worth mentioning. Avoid dead ends. There are times that the negotiations can come to a standstill. Therefore, in order not to spend a lot of time and energy on resolving the dispute, offer to discuss other issues and to those, return, when a more favorable environment.
During all negotiations it is important not to forget that the partnership and relationship should be mutually beneficial for both parties.
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