Negotiating Discounts From Manufacturers

Author: Brian Karas, Published on May 26, 2016

Is there room for just a little more discount in your purchase order?  

This report outlines some common tactics that often work, and do not work, to successfully negotiate additional discounts with manufacturers.

They include the good using:

  • Trades
  • Timing
  • Software
  • Demo Equipment
  • Terms
  • Timeliness

And the bad including:

  • Rationales
  • Promises
  • Complaints

** ***** **** *** **** * ****** **** ******** ** your ******** *****?  

**** ****** ******** **** ****** ******* **** ***** ****, *** do *** ****, ** ************ ********* ********** ********* **** *************.

**** ******* *** **** *****:

  • ******
  • ******
  • ********
  • **** *********
  • *****
  • **********

*** *** *** *********:

  • **********
  • ********
  • **********

[***************]

How *** ****** ***?

****** ****** *** ********** *********, ** *** ** ******* ** understand *** * ************ **** ******.  ****** **** *** *** ********* ******** and *******, *** ******* ******** ** ********* *** ****, *** there *** **** *** ******:

  • **** - **** ****** ** * ********* ******* *****, *** is ********* ******** ** **** ********* **** ******
  • ****** * - ******** ***** *** * *** ** ***-****** dealer
  • ****** * - ******** ***** *** * ******* ******
  • ******* ****** - ******** ***** *** *** ******* *******

************* ********* **** ********* ********* ***** *** ****** ******, *.*., "Bronze", "******", "****", "********", ***.

** *** ************ ***** ****** *** ******* ************, ***** **** be * "*********** *****" ******* **** ***** *** ******* ******* price.

Standard ******** ******

****** * ***** ** ******** **-**% *** ****, *** *** be **** ****** ** *****, **** ********** **** ********* **** another *-**% ** ******** *****. 

************* ******** **** ** * ** * ******* **** **** *** **** *** *********.

** ** ********* ** ********** * ************'* ******* ******** ********* to ********* *** **** ******** ** *********** ********* *** * given *****.  **** ************* **** **** *** **** ***** ******** tiers ***, *** **** ** ***** ** *** *****.

Who *** ******* *********?

** **** ***** * ******** ** ********* ******* *** **** a *% ******** ** **** ** "*** * **** ****".  This ** ***** ******* *** ******* **** ** ** *** Premier *****, *** ***** **** *** ******** **** **** * dedicated ******* *******, *** * ******** ******, ** * ******** can **** * ***** ******** ******* **** **** *** **** becomes ************ *** *** *******.

*** ** ****** ***** ***** ******** *** ***** ******* **% discounts.

********* ****** **% **** ***** **** *** ******** ** * VP ** *****, ** ********* **** *** *** ** ***** persons, ********* ** ********* ********* ** *** *******.

**** ***** ******, ********** ***, *** ******** *** **** ** total *******, *** **** ** ********* *****.  **** ****** ** RSM *** ******* *% *********, **** **** ********* *** ** do **** *** *****, ***** **** *** **** **** ********* a ******** ******* ******* (*** ******* ***********) *** ****.

Trade *** ******** **********

******** *** **** *** ** *** * ******** ** ** offer ********* ******* ******** ** ******.

************* *** ********** ******* *** * **** **** *******.  ** you **** * ********/******* **** ********* **** ****** ** *** manufacturers *******, ** ** ** * *** ********, *** *** customer ** ******* ** ***** ***** **** ** ** **** in * **** *****, **** ****** *** **** ***** ** the ************.

********* ******* ** ** * ********* *** ***** ********* *** also ********.  ****** *********, ****** ******, ****** *** ******** ************** customers *** ***** **** **** *** **** ** **** ** counterparts **** **** **** * ****** ****** ******** ** ******** on ***** ***.  ** *** **** * ******** *** ***** be ******* ** **** ***** ** * ********* *** ****** sales, ** **** ** **** **** ***** **** ****** ***** a ******* ********.  *********, ** * ******** ** ******* ** allow ***** ********* ********* ** **** ** ***** ****(*) ** see * ******* ** ******, **** ** ********-******.

Work **** *** ** ******

**** ****** ****** *** *** ** * ******* ** *** best **** ** **** ****** *** *** *** *********.  **** can ** **** ** *** *******, ** ***, ** **********, but ** *** *** ** ** ****** **** *** *** want *** ***** ** **** *******, **** ***** ****** ** to ***** *** ***** **** ******* ******.  ** *** **** a **** **** ** ****** ** **** ****** *** *********/*** of * *******, **** ** *** *** *** *** **** how **** ***** ****** ** ****** **, *** *** **** better **** ** *** *** * "********" ******** ******* ** trying ** ****** *** ***** *** * ********.

Ask *** ********* ******* ** ********

******** ******** **** **** ***** ********** **** ****, ******* ********* software ******** *** ************ ******** *** ****** ** ********* **** a **** *** ****. *** *******, *** ***** *** ** the *** "*** ******** *** * ****** ***** ******, ** you *** **** ** * ***** ******** * *** ******** get **** ** *** * **** *******."  ****** ** **** the ************ ******* ** ** ** ******* ** ** * post-install ******** *** *** ******** *** ** ******* *** ** reduce **** ******** *** ***** **** ** *** ************.

** **** ******* ****** * ******** ** *********** ****, *** the ************ ** ******* ** ***** **** ** ******** ** their *********.  **** ** ***** **** *** ******** **** ***** in ****, *** ********* * ******** ****** **** **** ***** and ****** *********** ******* **** **** **** *** ****.

Leverage **** *********

**** ********* *** **** ** * **** *********** *****.  ** a **** **** ** ******* ********* ** *** ********* ****, and **** ****** **** *** **** ** ****** * **** system, *** *** *** **** **** ** ** ***** ** no ****.  ** **** ******* ******** *** ************ ***** ** the **** **** ** ****/******* ****, ** **** ** ******* that ** ****.  ***** ****** ***** **** * **** **** budget, *** *** ****** ** **** **** ****** ** **** equipment, ** **** ** ** ** *** * ***-******* ** hot ****.

Negotiate ******* *****

*** ****** **** **** **** **** * **** **** ** complete (*** **** *** ****) *** *** ** **** ** negotiate ******* ******* ***** ** ***** ********.  ***** *** * direct ********, ******** ***** *** **** **** ******* ********.

Pay ** ****

** ******** ** *** ** *** ***** ***********, *** **** bills ** ****.  ** **** ** ****** *** *** ***** person ** ******* * ********, ** *** ***** ********** *** bigger *********, *** ** ********** *** **** *** **** * record ** ******** * ****-*** *******.

BAD - ***** *********

** *** *** "* **** ** ***** * ****** (** 10 ******) ** **** *********** ** **** ****". ** *** are ***** *** * ************ ** **** **** *** *********** make ** **** ***** **** ********(*) *** **** ******* ******* to **** *** ***** ** *********.  **** ******* ** ***** manufacturers ******** ** *** *** **** ******** *********, *** ** prepared ** ******* *** *** ******** ** **** ******* ** price **** ***** ** **** *******/********.

BAD - ****** ********

** *** *** "* **** ** ** ****** *********** ** this ***** ****, *** ***** ** *** **** ** **** get * **** *****".  * ******** **** ** ***** ********* about * **** ** ******** ** ******** **** ** **** checkbook ** *** **** ** *****.  ** *** ***** ******* this, * ****** ******** ***** ** ** *** "* ** discounting ** *** ***** ** **** ***** ****, *** **** the ***** *** *** **** * ***** ** **** ***** I ** ***** ** **** ** ***** ** ****** **** you.".  **** ***** **** *** *** ***** **** **** ** win *** ********, *** **** *** ***** ******* **** **** orders **** **** ***** **** ***.

BAD - ********* ********** **********

** *** **** *** ************ **** *** **** * ******** or * ****** ** **** **** ******* *** ******* *** more ********* ** ******* **** ********, ****** *** **** ***** documentation ** ***** ** * ******* ********** ** ************** *****************.  These ***** ** ******** *** ***** *** ********** ******* *****-***** engagement.

Working **** ************

** *** *** ********** ******* ************, *** *** **** *** the *********** *** * ********, ****** **** ******* ** **** small *******.  ** *** ** ****** ** *** *** *** if **** **** * *********** *********** **** ** ***** ** offer ****** *******.

** *** **** ** ******** ** *****-**** ************, *** ******** distributors *** * ***** *** **** **** ******* **** *** are ******* *** *** **** *********** *******.

**** ************ ***** ************* ******** ** ***** ****/****-****** ******* ** competitive *****. *** **** *********** ** **** *** ***** *** services **** **** **** *** ****, **** ** ***** *** not ****** *********.

 

Comments (7)

I am curious to hear from manufacturers. How much does knowing the competitor for a project impact willingness to discount? For example, does it matter knowing that the main competitor is someone who generally prices high (like Axis or Avigilon) versus who generally prices low (like Hikvision or Dahua)?

For the most part, if a manufacturer dedicates time to bid on a project, the end goal is to earn the sale and grow revenue. Understanding the competitive environment can be the difference between discounting to become the winning bid and collecting revenue for your firm or finishing with the second best price and walking away with a loss. Therefore it is very important to know who you will compete against and to have a strategy in place which offers a price that the end user will want to select.

It helps.

As a manufacturer there are always strategic reasons to win a job beyond just increasing sales volume.

Brian identifies "teamwork" at many levels and it makes a difference.

For example, does it matter knowing that the main competitor is someone who generally prices high (like Axis or Avigilon) versus who generally prices low (like Hikvision or Dahua)?

Guessing, but I'm going to say that it matters mostly that the "competition" is actually your "competitor", generally speaking.

So, Hik vs Dahua for instance might lead to a bloodier battle than Dahua vs Axis, where neither might find great incentive to go much beyond standard discount.

This makes sense since a failure in a deal involving your archrival is a double loss, they gain revenue that you lose.

I only give discounts in three scenarios and all require a lot of information-

1- Registered projects that a Reseller has driven us and it now goes out to bid and they need additional protection. I work with the reseller to know what the competative landscape is so the discount could be a little or a lot.

2- Your typical competative situation of me vs them. Again, as Brian notes this can't just be a call asking me for 5%- just because. Not only do I not want to give away discounts I shouldn't have to (nobody here is a .org) but also the opposite. What if I go in at 7% discount but needed 12% to win? And the project was big enough to go to my VP and ask?

3- is much more rare but for political situations. We screw up and I have to make it right. The reseller screws up and I help them out. Someone bulk purchases (yes that can work) and gives me an accurate forecast. Things of that nature.

The bottom line is, in sales, discounts are always on the table IF there is a business case for it and it's not every dang time. If I could justify renting a Ferrari for a week, I could do it. Still trying for that one :).

All of these recommendations are great, I would add the following.

Social Media:
Be a social media advocate for them, create simple videos and make sure they know you are actively promoting their brand. This might be difficult for integrators who install a range of systems, but it is possible. Become connections on LinkedIn and friends on Facebook. You can limit who sees what posts on Facebook. Create separate groups for clients, vendors and your friends. This can help you develop and outside of work relationship with them, so when you meet face to face, you have something to talk about other than the discounts you need. Friends help friends out.

Go to them:
Do not make them come to you every time you meet, take some time and visit them in their office or bring them to lunch on your dime, near their office. Professional/profitable relationships are a two-way street.

No Threats:
Do not threaten to leave them every time something goes wrong, or tell them that their competitor can beat their price. Positivity is a more powerful negotiation tool then negativity. Make sure they know you are loyal to them, but not ignorant to other vendors offerings.

Free Cable/Connectors
Rather than asking for discounts on equipment or software for every single project, I often shoot for free cable/connectors when dealing with a distributor.

John, good ideas. I wanted to second this:

"Be a social media advocate for them, create simple videos and make sure they know you are actively promoting their brand."

While that would not be my style as an integrator, from the perspective of gaining influence and potential discounts, integrators that are social media advocates for manufacturers stand to gain a lot.

There's not a lot of integrators doing this so an integrator who does this (at least a few times) is almost guaranteed to get noticed by the manufacturer's management. Being the guy/gal who gives them free advertising and 3rd party validation will help getting noticed / approved on discretionary things, like discounts.

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