In dealing with other small businesses and contractors, do you use their bid as a starting point to negotiate a price? Well, you should, said Rosalind Resnick on Vest Pocket Consultant this week. She noted that just as in an open-air market, the first price quote is always inflated and probably much above what the good or service is worth.
But, she said, haggling does take a certain amount of skill. Witness:
- “I tell the vendor that I’d love to hire him immediately but that I need to get some competitive bids,” Resnick said. Creating the illusion of competing vendors will automatically trigger a price drop. No one wants to think they won't get a job for not coming down a bit, especially in this recovering economy.
- “I do the math to figure out the vendor’s profit margin,” Resnick said. You can squeeze the contractor's profit by figuring out the largest cost – labor – then estimate the time it will take and what everyone gets paid. Getting a profit number will give you an advantage in negotiating down.
- “I mentally prepare myself to walk away,” Resnick said. Line up back up plans because if you rely on just the one vendor to do the one thing, you will be held for ransom eventually.
Read the entire article at Vest Pocket Consultant.
Join the Bizmore discussion: "What are some common mistakes salespeople make when generating leads?"
Email
ShareThis