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Spend most of your negotiating time shopping for the items that cost the most. If you have a policy of o..." />

Concentrate On the Big Items

Date: 08/01/2011

Spend most of your negotiating time shopping for the items that cost the most. If you have a policy of obtaining three quotes for new items, it might be worthwhile to consider asking for much more. For example, if you are shopping for a piece of equipment that costs around a million dollars it is wise to obtain six or more bids. Yes, it takes much more time, and time is money, but the value of your time is small in comparison to the potential savings.

It is a good idea to shop over a wider area when the value of the purchase is high. Looking at distant and foreign sources can often provide startling results. The lower cost can more than offset transportation, insurance, and duties.

Placing orders for low value items may only take a few minutes, but shopping and negotiating for high value products can take several days or more. Some successful negotiations can take numerous meetings spread over a number of weeks.

It is prudent to plan your shopping and negotiating efforts when it is expected to take more time. Not planning means you will be rushed to close a deal, and when that is the case you are placed in a very weak negotiating position. You are not only pressured by salespeople but also internally within your own organization to make concessions when you must place an order.

When you plan for an extended negotiation, make sure you allow for the time to produce the product or fill the order in addition to the time required for discussions prior to order placement.

Low cost items should not be excluded from extended negotiations and multiple bid requests if the usage of those items is high. Comparison of the total cost of the purchase for a period of time may be called for.

For planning purposes determine the total cost of all the items you expect to purchase within a time period, such as a year, and then, using the computer, list them in descending total dollar amounts. Concentrate on the top ten or twenty items which usually account for eighty percent or more of your dollar purchases.