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Saving Money

A guide to negotiating a great deal Add to ...

“That’ll cost $1,000,” she says. “We can get started next week.”

But you’ve come prepared. You’ve looked up other suppliers’ prices and promotions. You’ve checked ads, websites and direct-mail offers. You’ve polled colleagues and investigated whom your competitors are using. You’ve sussed out the state of the supplier’s industry — has it been hit hard by the downturn and is therefore desperate for new or more business, even with a small profit margin?

Now, start bargaining:

Can I speak with the manager? First, make sure you’re talking to someone who has the authority to offer discounts, so you don’t have to repeat your spiel to several employees.

What’s your small-business discount? Instead of asking if there is a discount, phrase the question in expectation of one. While the answer to the former can be a breezy “no, sorry,” the latter is more difficult to quickly dismiss

I’m sure you can give me a break on this because… Always give a reason why you feel you deserve a discount. Point out that you’re buying a large volume or that the product lacks a feature that is important to you.

You guys have always been great. A little flattery is a great negotiation lubricant. You want the supplier to want you as a customer, so establishing and maintaining a good relationship is a valuable investment. Show your familiarity with the vendor’s product line so they recognize a loyal customer, and express empathy with their concerns.

I’ll take it if you knock 10-per-cent off. Try to find out in advance the vendor’s markups so you know how much wiggle room they have to discount and still make a profit. If you can’t, suggest 10-per-cent to 15-per-cent off, recommends Herb Cohen, author of You Can Negotiate Anything. If you feel confident you’ve offered a reasonable price, stick to it.

I’d be happy to recommend you to others. Offering to refer customers or serve as a reference can be an intangible but valuable service to the supplier, especially if they’re just getting their business off the ground or face a highly competitive industry. This is particularly true of business services such as accounting or commercial law that rely heavily on relationships.

I’m looking for a long-term supplier. Make your business attractive by offering to negotiate a long-term relationship, which would make you a worthwhile customer even at a lower unit price.

Can I get your loyalty discount? If you’re a good customer of some standing, find out what kind of pre-set price breaks the supplier does offer — A new customer discount? Family and friends discount? — and request that deal for yourself.

I’ll gladly pay now. Offering cash up-front can divert many hesitations, especially in tough economic times. Service businesses are particularly burdened by having to chase default accounts and manage payment plans, notes Adam Baker, who writes a blog about his fight with debt and has become a student of haggling. “In my experience, the smaller the business, the more valuable paying up-front will be.”

I guess we’ll have to forgo these extra features. By refusing or cancelling non-essential elements of the product or service, you show the supplier that you’re serious about finding savings, says Gartner research-director Stewart Buchanan in a webinar on hardball negotiation tactics. You also inflict an immediate revenue hit.

What would you do if you were in my shoes? If negotiations have stalled, restate your issue with the price and turn the tables by asking the supplier to suggest a more affordable option or ways you could trim the cost. It can produce surprising discount ideas that might never have occurred to you, especially when buying services like insurance or accounting that have complex pricing structures.

Let’s look at this line item first. It’s best to negotiate smaller or item-specific discounts before broader ones—for example, asking for a price break on a particular office cabinet before requesting 10-per-cent off the entire order. Not only is it harder to get the smaller discount once you’ve secured the larger one, but a broader discount can often further lower the price of the item you’ve already managed to haggle down.

I’m going to have to check with my partner/controller/boss. Borrow the classic car-lot technique and establish a bad cop offstage who’s not going to take anything but the supplier’s best offer.

I’d love to work with you, but unfortunately… Show that you’re serious about buying, and that it’s worth the supplier’s investment in time and attention to work out a deal with you. Make clear what it would take for you to become a customer.

Let silence ring. You’ve made your pitch for a discount, now wait for a response. “The quickest way to shoot yourself in the foot is to talk before the other party,” Mr. Baker advises. “Just keep your mouth shut. I’ll admit sometimes the silence can get a little weird, but opening your mouth will cost you money in the long run.”

Okay, you win. After you’ve beaten the price down, don’t push your luck. Accept the vendor’s offer. If you let the supplier have the final word, you’ll leave him smiling — while you pocket the savings.

Special to The Globe and Mail

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