Business Negotiation July 09, 2012

Buyers: You Have More Power Than You Think

All of us know how hard it is to negotiate against a seller who has no competition. However, even the strongest seller has limits in how much they can take advantage of their superior bargaining position...

All of us know how hard it is to negotiate against a seller who has no competition. However, even the strongest seller has limits in how much they can take advantage of their superior bargaining position. Here are a few ways the buyer can generate competition where little or no competition appears to exist. If you know how to bargain with a seller who has no competition, dealing with one who has will be a lot easier.

One thing a buyer can do is to decide to do the work themselves. They can favor a “make” decision rather than a “buy” decision. I have seen many organizations make just such a decision after being exploited by a single-source seller for years. Not only did the seller lose the business, but they found themselves confronted by a new and formidable competitor.

A buyer can also create competition between the seller’s long-term interests and their short-term profit goals. The buyer can reduce the size of their order or spread it out over a longer time period. They can break the requirement into parts- some parts to be eliminated, some given to other suppliers, and still others done themselves.  This has the effect of creating internal competition within the seller’s organization.

The third way a buyer can create competition is by dealing with others in the same distribution system. Consider investigating the used market. Look for deals at lower distribution levels, where sellers may be seeking to get rid of large amounts of inventory.

Taking on a sole-source supplier need not always be a problem, unless you, as a buyer, choose to be passive and give in too quickly. Just keep in mind that if you give in this time, you’re likely to be exploited even more at the next negotiation.
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