So, we want to understand where the customer’s red line might be. We cannot trust that they will give us an honest answer if we ask them, but with some preparation, we can have an idea.

Remember, we are needs-analysts. To understand the customer’s position, these are some questions to think about:

• How is the customer’s business doing? If they are struggling, price is probably important, and payment terms. If business goes well for them, speed is probably important, and volume flexibility.
• What is their position in the market? High quality, innovation, low cost, …
• What’s new on their website and on social media? Do you get their newsletters?

Be aware, that the customer always has a bigger picture than only the PCBs. The more you understand the bigger picture, the better you can show why they should choose NCAB.

Then you want to understand the customer’s expectations:

• What suppliers does the customer currently have? What do you know about their offering and prices?
• Have we quoted to them before? They will expect something similar.
• Have we delivered to them? Were they happy? You do not want to be surprised by a complaint during the negotiation.

If you know the expectations, you can prepare to meet them, exceed them, or have very good arguments for why not.

And then it is the customer’s bargaining power:

1. Are many other reasonably good suppliers available? Do they have capacity?
2. What switching/tooling costs are relevant here?
3. What is their need for engineering, audit…?
4. How important is NCAB’s reliability to the customer’s project?

These preparations will help you understand what value the customer may be willing to pay for. But, of course, assumptions are assumptions and you still need to keep your mind open during the talk.

By inviting you to negotiate, the customer has shown that they want to make a deal with you.
So be bold! In Ingrid’s purchasing career, less than 10% of sellers touched the edge of her ZOPA. The other 90% made less money than they should have.

Also prepare for the meeting itself:

Who will be there? Usually, managers think about strategy, economists about money, engineers about design, and project managers worry about the time frame. If you are well prepared, you can show all the people in the room how NCAB-qualities are important to them.

What are their expectations? Will they make a decision? Or are they just exploring? Or will someone else decide who is not coming? How much time do you have?

And let’s follow Howard’s advice in the 5Ps course – send an agenda! By sending an agenda with the price discussion at the end, you give yourself time to explore the ZOPA, and reduce the risk of getting stuck in the price corridor.