Negotiating with a Supplier: Volume Discounts and Payment Terms

Rachel! Great to see you again. How's business?

Busy, which is a good problem to have.

And that's exactly why I wanted to sit down today.

Ha, I had a feeling this wasn't a social call.

We're planning to double our order volume next year.

Wow, double? Now you've got my attention!

Here's the thing, though. Your unit price is too high.

At $4.20 a unit, we can't scale up.

Well, our quality speaks for itself, doesn't it?

It does. But two competitors have quoted us under four dollars.

Hmm, I see. What kind of volume discount are you after?

Fifteen percent across the board.

Fifteen? Ouch! That would wipe out our margin.

Well, I could stretch to eight percent,

but only with a higher minimum order quantity.

Eight percent isn't going to cut it, I'm afraid.

And frankly, your lead times keep slipping!

Ugh, that was the port strike. It's sorted now.

Either way, we'd also need payment terms of net sixty.

Net sixty? Oh, that's a real deal-breaker for us.

Then maybe we're close to our walk-away point.

Hold on, hold on. Let's not walk away just yet.

What if we signed a long-term contract instead?

Three years, and you'd buy exclusively from us.

Hmm, exclusivity is a big commitment for us.

In return, I'd give you twelve percent off, and net forty-five!

So... make it net sixty, and we'll talk.

Ha, you drive a hard bargain!

Let's meet halfway. How about net fifty?

Net fifty, twelve percent, three years. Okay, deal!

Wonderful! I'll send the contract over by Friday.

Great. But please put the lead times in writing.

Of course. A pleasure doing business with you, Rachel.