It is not a comfortable feeling when you ask a vendor to reduce the price of something.
Think back of a time when a customer asked you the same question. Most of us have been on both sides of the conversation at some point in our lives.
People usually take it as an insult if you tell them that they are asking for too much. It questions their judgment and can bring about a general feeling of resentment.
However, price negotiations need to be done, especially if you are buying a bulk quantity.
Let’s face it; we all know that vendors/suppliers take benefit from economies of scale so technically they shouldn’t be charging too much for the product in question – especially since they are obviously earning a substantial profit.
Things become especially tricky if you are writing a letter to a vendor (and not speaking to him face to face) because this allows for misunderstandings and future business relationships issues. But if this form of communication is the only available one, you do not have a choice.
The tone of your letter will need to be decided first based on the following two questions;
Is the vendor you are writing to a new one?
Have you been doing business with him for years?
This will decide how you want to begin and what you want to write.
The sample price negotiation letter below is written by a procurement manager to a vendor with whom he has done business for some years.
Sample Price Negotiation Letter to Vendor/Supplier
Matt Veloso
Procurement Manager
MaKa Systems
90 Irving Avenue
Brighton, MA 22565
(000) 789-8545
[email protected]
June 8, 2019
Mr. David Beckham
Supply Manager
ABC Company
88 South Circuit
Brighton, MA 29102
Dear Mr. Beckham:
Thank you for the proposal you sent for the marketing supplies for our new campaign. I sincerely appreciate the effort you put into determining the price of each unit and composing such a comprehensive proposal for our company. As always, your thoroughness and professionalism are evident from the sheer effort at your end.
I understand that it took much time and effort to come up with this proposal, and I do not for a minute question its genuineness. However, we have been allotted a specific budget for this particular campaign, which is much lower than our usual allotments. The company had to cut back on expenses due to a recent loss that we incurred on a previous campaign and we are trying to be moderate where costs are concerned.
At my end, I have had to research quotes from other vendors and was provided with two very reasonable quotations. While personally, I would not like to work with any other supplier than ABC Company, I will have no say in the decision to choose one if the company is provided with a lower price quotation than yours. I would like to inquire if it will be possible to decrease the quote for this particular project so that we can continue working as we have in the past. I believe that if we sit down and discuss this, you can make suggestions as to what material costs can be excluded to bring the overall cost down.
On the other hand, if you feel that you can give me a lower quotation on an immediate basis, I will be more than happy to send in a check as soon as we agree on a price. Any flexibility in this offer will, of course, pave the way for further work between MaKa Systems and ABC Company so please consider this seriously. I am waiting for a prompt reply from your end.
Thank you very much.
Sincerely,
Matt Veloso
Procurement Manager
MaKa Systems