Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this is Part II of a two part series.  Both Part I and Part II deal with practical negotiation advice for buyers and sellers.

Q)   How does HID train the buyer to treat us?

A)   HID influences concession behavior and gives us negotiating room.  The higher price sets an expectation of higher quality, better service, or some other benefit worth the price differential.  The buyer assumes that concessions will be difficult to extract without affecting the overall picture. 

A business adage says, “You get what you pay for”.  We train the buyer in the truth of that conventional wisdom by consistent use of HID in negotiation.  This raises the buyer’s settlement bar as it moves line with expectations. 

Q)   Is there any impact on the personal side of buyer/seller relations?

A)   Yes, we can satisfy the buyer’s need to win without damaging the trust relationship.  This is especially true of dominant personality types. The emotional imperative works like this.  You build in a price concession of 15% before meeting a new buyer.  He demands a 10% price reduction, thus revealing his HID first.  He might well settle for a 5% cut, or 1/3 of your ultimate position.  Nevertheless, he has ‘won’ the battle, you made a profitable sale, and he has now been conditioned for the next encounter.

Q)   Will setting the HID too high infuriate my customer?

A)   As a buyer, I sometimes act shocked as a negotiation tactic.  I ask the seller to justify its position.  If the seller is flustered, tentative or brazen, I know in a jiffy that she is not interested in trust.  On the other hand, if I detect a willingness to explore mutual benefit, I gain a new perspective that holds promise. 

Q)   What is a non-price example of how HID is used?

A)   In preparing for a negotiation, use visual aides to help you see what you mean.  Here, we examine delivery as a negotiable item.  The chart below compares delivery lead-time from the buyer and seller viewpoints.

The Buyer’s HID is 2 week delivery, which no one on the planet can do.  Our HID is 5 weeks, or two more than our final offer position of 3 weeks.  Conceding one week on the Seller’s HID, to 4 weeks, brings us into the Buyer’s settlement range.  If the buyer insists on 3 weeks, our NO position, we can agree then.  Alternatively, we have the option of conceding earlier delivery on the condition that we get a price relief in return.

When buyers ask for the “best deal up front”, they betray their misunderstanding of the negotiation process in general.  The HID factors inherent to the bargaining process protect both buyer and seller.  The relationship must first take root in trust.  After trust has been long established, then the time is right to discuss getting down to the best deal right off the bat.