Just one piece of advice in a negotiation before I die…

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When I started in procurement long time ago, I was lucky to join a top company who had a lot of insight on the function. They spent a lot of time, money and efforts on training me, so I could acquire a good collective knowledge of theory and best practice. For that I´m very grateful. Included on my training program was a mentoring initiative. This initiative was to have an experience category manager, come down and spend two weeks sitting next to me and teaching all he could in a real life negotiation.

My mentor “The Doctor” was an elder highly experienced professional who was near retirement. He took the time to walk me through a couple of negotiations and show me all his tips and tricks. He was very organized and structured. He developed all sort of documents to keep track of all the steps of the negotiation. He was as old school as they come, but was up to date too. He had gone through all sort of experiences and had seen the world change through time; had worked in different geographies and with different cultures.

I learned a lot from The Doctor, lessons in procurement, negotiation and even lesson in life. One that really stayed with me, out all that he thought me, was one about the final price in a negotiation. We were about to close a deal of a set of equipment for twenty three fuel storage facilities and he asked me about the price:

Is that the final Price? He said, yes that has a volume discount of 5% I replied. Then he said:

“Let me give you a piece of advice for a negotiation before I Die, when you are all set with price, ask for the additional discount! You might not get much, or anything at all, but you might miss on some additional benefit for not asking!”

You will not believe how much I have saved with this advice! It is not a universal practice and it does not apply to all negotiations, but in the right case there are some benefits that will not be left in the table. See, sales always has a range in price they can maneuver, by asking for the last discount, you can confirm that you have gone down to the best price; in case you are still over, even a little over. Also if there is an intent to create a relationship, or foster one that is already set, you will get that good will discount.

The best part is that by asking you are not pushing. Your vendor will decide if there´s room for a discount or not. On your side it helps to double check if the final price is actually “THE” final price.

But the way, The Doctor is still Alive, and I´m still collecting savings thanks to his advice!

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2 thoughts on “Just one piece of advice in a negotiation before I die…

  1. Interesting story. The tactic, Doctor taught you is known as “escalation” in the negotiation terminology. Having spent nearly 30 years in procurement field until my retirement and negotiating millions of dollars of contracts with global suppliers, I have seen buyers and sellers using “escalation tactic” many times. In my opinion, using this tactic can be both “fair & ethical” or it can be viewed as “unethical” depending on the situation and how you escalate or “ask for that last discount as Doctor advised you.

    Once the parties have reached an agreement over final price or other terms for that matter and shook hands, escalation is and maybe viewed as questionable or even unethical. Escalation on the morning after the negotiation is most certainly unethical in many situations. On the other hand, if the parties haven’t exchanged the final smiles and shook hands at the end of the negotiation session and you as a buyer asked for one last discount (based on a legit reason) then escalation is quite fair and ethical. As a common courtesy to your counterpart and as an ethical procurement professional one must base his / her escalation on sound reasons and inline with standards of normative fairness. By the way, take ethics out of the procurement profession and it can quickly turn into a dirty game.

    I enjoyed reading your blog. Good work!

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