Your company can potentially save a lot of money on purchases with discounts but to open negotiations with your suppliers, you need to be able to write a good letter. These types of negotiations can wind up with a hard edge to them – after all, your discount will cost the supplier money – so it’s important to strike an amiable tone. Don’t pretend like you’re doing the supplier a favor by asking for a discount. Don’t bare your fangs, and don’t be rude. Be cordial, honest and matter-of-fact.
Business relationships can range from the cozy and familiar to the outright hostile. A good negotiation strategy must consider the dynamic you have with your supplier, her style and preferences and even regional customs. Sometimes, opening negotiations with a written letter can seem cold, and that won’t help you get your discount. Use your best judgment to decide whether to first broach the topic in person or over the phone. In most cases a written letter is the way to go, but just be aware that choosing to send a letter at all is a strategic decision.
Don’t waste any time getting to the point. State your general request for a discount in the first or second sentence of the letter. Also identify the particular contract, goods or services you want to be discounted. Hold back for the moment in specifying exactly how much you want, and on an itemized list of discount requests if applicable, because you’ll get to all that when you press your case. Instead, make the opening paragraph short and punchy, so the supplier gets onto the same page right away and knows what to expect from the rest of your letter.
"We are pleased with the quality of [product] you supply. Nonetheless, as our firms have done business together for so many years, we would like to request a discount on future orders."
When you press your case, focus on your value as a customer. If your two companies already do business together, quote some high-level purchasing figures. You also can reference the length of your relationship as a way of showing off your reliability as a customer. If the supplier has rivals that offer equally serviceable products at competitive prices, make a point of it. You can also focus to a lesser extent on how the discount would benefit your company, but if so try to find an angle that shows that whatever helps you will ultimately help the supplier too. One possible example is that, if the supplier can offer a better price, you might increase the size of your orders.
"Please note that this figure has not been arbitrarily determined, but instead is based on a thorough assessment of the products available to us in the market as well as our own overhead and profitability. If an appropriate discount is granted, we believe we can buy a larger stock of 50,000 units per quarter instead of the usual 48,000."
After you’ve made your case, it’s time to put a dollar value on the table. Ask for your specific discount amount, be it in percentages or dollars. Itemize your discount request if necessary. When you state your offer, aim for a number that respects both your costs of doing business and the supplier’s. Give him an offer that, if he wanted to, he could responsibly accept on the spot. Oftentimes there is no second round of negotiation, just a flat yes or no, so by making a reasonable offer in the beginning you cut the risk of being denied summarily. If you anticipate that he’ll make a counteroffer, it’s okay to inflate your numbers, but keep it in proportion.