Good buyers are proud of their ability to negotiate, and well they should be. The ability to negotiate well is a valuable skill honed by education and experience. But the danger lies in assuming you have achieved the lowest possible obtainable cost. In most cases this is not true.

Let’s not confuse cost with price. There may be a lower price out there somewhere, but there may not. Cost is another matter. It can be hard for novices to understand, but it may be necessary to pay a higher price in order to obtain a lower cost.

The cost not only includes the price paid for the product but includes also the labor to use the product as well as the durability of the product. For example, you may need to pay ten or twenty or more percentage higher in price to have a better product that lasts twice as long.

You may need to pay a much higher price to reduce the amount of labor necessary to use the product. The smart buyer must calculate the advantages of paying more in the short run with the cost in the long run. The probable need for the product over time must be compared with any potential savings.

Well informed buyers know that suppliers argue that their higher price is justified because labor savings and long-run cost more than justify their higher prices. They point to better quality and better service to encourage purchase of their product rather than the competition’s. Their arguments can be true and sometimes are, but it is naive to assume they are. The buyer must take the time and effort to do his or her own calculations. The seller rarely knows the buyer’s long-term needs and therefore can’t objectively evaluate the total cost of the purchase.