Tom Peruzzi's thoughts on digital, innovation, IT and operations

Our vendors always deliver best price

Posted in financial, startup failures by opstakes on November 19, 2009

It sounds so silly, but it always happens …. the longer you know each other and the longer a partnership exists, the better it gets? No not really in 90 % of all partnerships, especially vendors do all their best to get better prices, get out of project price agreements, anounce new hardware which is out of contract and lot more.

And they know you, your setup, your hardware and software, they know your employees and their habbits and behaviour and they do all their best to support your organization to get you and better prices (for them).

This is not wrong, it is their business intention and this is not as bad as above market prices because of buddies within upper management  (even this should happen, I’ve heard about it 🙂 )

So how to deal with: Trust your partners in terms of what they offer to you in terms of the concept behind, handle them carefully as they know you and the underlying organization. Handle them with care, as they did their job good for a long term and business partnerships can create business value. But keep on challenging their models and prices ALL the time by getting in either challengers or direct competitors. The 3 offer approach of large companies is not that silly, yes it is work, but the intention is to know the market price and get a price below.

But then you challenge them, never press price below their line, you should be interested in a vital and profitable partner, but you do not want to overpay. Keep the balance right!

Next, let them know that you challenge their model and price, so they will keep on deliver you (their) best results possible, but give them trust, that they are a preferred or strategic partner. So inviting others should show them, that you are interested in best price and best model. It should not show them that you are interested in changing your vendors. If you intend to do so, tell them why, what happened and how you are willing to cooperate with them in the future. But never blame your long term vendors!

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