How do you use market research to negotiate better prices?

1 Identify your needs and goals

Before you start negotiating, you need to have a clear idea of what you want and need from your vendor. What are your quality standards, delivery requirements, payment terms, and contract duration? What are your budget constraints and expectations? What are your priorities and trade-offs? By defining your needs and goals, you can establish your baseline and your target price range. You can also communicate them clearly and confidently to your vendor, and avoid unnecessary concessions or misunderstandings.

2 Research the market and the vendor

Once you have identified your needs and goals, you need to research the market and the vendor. You need to understand the current and future state of your industry, the demand and supply factors, the competitive landscape, and the opportunities and threats. You also need to learn as much as you can about your vendor, their products or services, their strengths and weaknesses, their reputation and reliability, their costs and margins, and their pricing models and policies. You can use various sources of information, such as industry reports, trade publications, customer reviews, online databases, surveys, interviews, and benchmarking. By researching the market and the vendor, you can gain valuable insights into the value and the price of what you are buying, and identify the areas where you can negotiate or leverage.

3 Prepare your negotiation strategy

Based on your research, you need to prepare your negotiation strategy. You need to determine your best alternative to a negotiated agreement (BATNA), your reservation price (the lowest or highest price you are willing to accept), and your aspiration price (the ideal price you are aiming for). You also need to identify your value drivers (the factors that increase the value of the deal for you or your vendor), your negotiation levers (the sources of power or influence you have over your vendor), and your negotiation tactics (the methods or techniques you will use to persuade or influence your vendor). By preparing your negotiation strategy, you can set realistic and achievable goals, create a win-win scenario, and avoid common pitfalls or mistakes.

4 Conduct your negotiation

When you are ready to negotiate, you need to conduct your negotiation in a professional and respectful manner. You need to build rapport and trust with your vendor, listen actively and ask open-ended questions, emphasize your common interests and goals, and focus on the value and the benefits of the deal. You also need to use your market research to support your arguments and proposals, challenge or verify any claims or assumptions made by your vendor, and explore different options or alternatives. You need to be flexible and creative, but also assertive and confident. You need to avoid emotional reactions or personal attacks, and handle any objections or conflicts calmly and constructively. By conducting your negotiation, you can reach a mutually beneficial agreement that meets your needs and goals, and reflects the market value and price of what you are buying.

5 Review and finalize the agreement

After you have reached a tentative agreement with your vendor, you need to review and finalize the agreement. You need to confirm the details and the terms of the deal, such as the price, the quantity, the quality, the delivery, the payment, and the warranty. You also need to document the agreement in writing, and have it signed by both parties. You need to check for any errors or discrepancies, and resolve any issues or concerns. You also need to thank your vendor for their cooperation and collaboration, and express your satisfaction and appreciation. By reviewing and finalizing the agreement, you can ensure that the deal is clear and complete, and that both parties are happy and committed.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?