Trying to plan and manage a negotiation session without a clear idea of context for the deal can be like being out on the ice, in the dark, with little idea of the depth of the water.
Calculating the following deal ingredients will help to establish the scope for concessions on each side
Size of Deal on the Table
• Customer’s share of the category?
• The customer’s share of our business (£, %)
• Our share of their business (£, %)
• Our share of their category (£, %)
• Size of the deal for them (Sales, Gross Profit)
• Size of the deal for us (Sales, Gross Profit)
The size of the deal for the customer in terms of gross profit on the amount sold will indicate the 'pool' of money from which they can make concessions.
Similarly. the supplier's sales and gross margin on the deal shows the potential size of concessions that can be made to the customer.
The rest is about matching, trading and fair share negotiation…
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