Negotiating a Purchase

2. Understand the Seller

2.1 Find out how much the supplier needs your business.

• Establish how urgently your order is needed.
• Find out what you can about the state of the seller's order book. For example, there may be spare capacity that the supplier needs to fill.
• Identify the supplier's likely objectives. For example, a company moving into a new market may set out to build market share initially, rather than make profits. This may give you more bargaining power on price issues.

2.2 Determine the supplier's negotiating strengths. Define what the supplier can offer that you value. This may include:

• Availability - for example, time-sensitive or immediate delivery.
• Quality - for example, a product with a track record or recognised brand name.
• Other factors, such as exclusivity, after-sales service or flexible payment terms.

2.3 Establish what the supplier will value.

This may include factors such as:

• Immediate payment.
• Larger volume purchases.
• A commitment to repeat orders.

2.4 Be alert to clues about what the supplier cannot concede.

For example, if cashflow is tight, the supplier may be unable to offer you the flexible credit terms you would like.

2.5 Anticipate the supplier's approach.

• Assess what you think the supplier's negotiating strategy will be.
• Find out what the supplier knows of any weaknesses in your negotiating position.