Recently, I heard a senior talk about a successful price negotiation with foreign clients some time ago. He provides Japanese clients with a piece of parts. And they routinely purchase 5,000 pieces from him every year. Clients tell him that they also buy from another Chinese supplier, whose number is about 5,000.
After receiving inquiries from Japanese clients this year, he also quoted quickly, with a unit price of $50 and a profit of about $4 per piece. However, his offer was valid for a shorter period, only 20 days, compared to at least 40 days in previous years. After the quotation had expired, clients asked him to update the price. Also, they emailed him that if he could reduce the unit price by $3, he would get more pieces, such as 7000. And he was asked to prepare all the materials because they were not stocking much.
After he heard the news, he analyzed their situation. They could not give all orders to one supplier. In general, the order ratio to one supplier did not exceed 70% of the total. So, he could get an order of at least 3,000 pieces. And clients were in urgent need of the goods. Due to process differences, his production cycle was ten days shorter than the other supplier. Therefore, clients would not put many orders to another company.
Then, he quickly replied to clients. Instead of agreeing to a price cut, he told them that he had to adjust the price to $53 because of the recent rise in material prices and the RMB exchange rate fluctuations. Although clients were not satisfied with the adjustment, they accepted it soon. But the number of orders was less, only 3,500. Meanwhile, clients stressed that the goods must be delivered on time.
For their companies, the profit at the time of the offer is approximately $20,000. But clients ask for a price cut. If he agrees, the profit will become 7,000 dollars. At this time, the investment is larger, but the profit has been reduced a lot. It will be risky. After the price adjustment, although the order quantity is less, the profit is higher to 24,500 dollars. Profits and profit margins have increased without increasing investment.
When the senior talked about this example, he also mentioned that he dared to raise prices because he was familiar with the procurement process and model of Japanese customers. He also knew that they paid more attention to the delivery date than the price. At the same time, it was predicted that the competitors may maintain the original price or slightly lower prices, so the order volume of competitors increased.
Although the order volume is reduced, he also proposes a price that the customer can accept and increase the profit and profit margin without increasing the investment. This shows a strong ability.
Therefore, in the price negotiation, if clients increase the number of order for a price reduction, you must consider carefully whether the absolute profit is increased or not.
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2. What Kind of Employees Do Foreign Trade Enterprises Prefer?
3. How Do Newcomers Choose the Right Firm?
4. How Do Novices Prepare for Interviews?
5. How to Choose the Right Foreign Trade Position?
6. Are Girls Suitable for Foreign Trade Sales?
7. Do Exports of Traditional Industries Have Development Space?
8. Is Foreign Trade Newcomer’s Income Generally Low?
9. How to Adapt to Foreign Trade Posts Asap?
10. How to Improve English Ability in the Short Term?
11. How Can Newcomers Better Communicate with the Leaders?
12. How to Get the Client’s Trust in the Short Term?
13. What Should I Do if I Have A Dispute with the Client?
14. How to Adjust Attitudes When Meeting Differences in Company?
15. How to Communicate with Foreign Customers?
16. What Should I Do if the Company is Filled with Intrigue?
17. What Reference Books Should Foreign Trade Newcomers Read?
18. How to Make Yourself Look More Professional?
19. How to Adjust Mentality When You Switch to Foreign Trade?
20. How Does the Salesclerk Calculate the Gross Profit?
21. How to Calculate the Export Tax Rebate?
22. How do Newcomers Develop Market Based on its Features?
23. How to Calculate the Export Cost Price?
24. How to Fill in the Vendor Registration Form?
25. What is the Format of A Letter of Authority?
26. How to Attract Potential Customers in the Exhibition?
27. The Main Features of Reverse Auction and the Skills to Attend It
28. The Experience of Attending A Reverse Auction
29. Why Don’t Place Orders for Good Price and Products?
30. What if Customers Require Not to Supply to Its Competitors?
31. Can You Really Buy Real Buyer Information?
32. How to Make A Standardized Quotation?
33. How to Prepare for Customers to Visit Our Factory?
34. How Should We Arrange for the Visit of Executive Clients?
35. How to Prepare for the Quality Inspection?
36. What Should Be Noted When Eating Food with Customers?
37. How to Work as A Good Banquet Translator?
38. How to Reasonably Arrange the Time When Customers Visit?
39. How to Prepare for Visiting Clients Abroad?
40. How to Make the Minutes of the Meeting?
41. What If Clients Propose to Sign Exclusive Sales Agreements?
42. Is the Cost of the Hotel Paid by Customers or Us When Visiting?
43. Can Subcontractor Warranty be Provided to End-users?
44. What If the Customer Suddenly Does Not Want the Goods?
45. Suppliers Lost Chances for Backing Up on the Highway
46. How to Maximize Profit through Reasonable Price Strategy
47. How Should Foreign Trade Companies Find their Position?
48. How Do Foreign Trade Companies Choose Export Suppliers?
49. How to Enhance the Control and Influence over Suppliers?
50. Is It Proper to Let Clients Ask Manufacturers to Solve Problems?
51. How to Agent Domestic Factories to Export Their Products?
52. Which Way to Pay the Agency Fee is better?
53. Why Do You Have to Know about Products, Suppliers, Clients?
54. The Process and Cost Calculation of Agent Import Business
55. How to Straighten Out Relationships in the Agency Contract?
56. How Do We Show That We Need An Agent in the Contract?
57. How to Do Good Jobs of Agency Import Agreement Service?
58. How to Determine A Reasonable Agency Fee?
59. Is the Agency Business with Low Agency Fees Worth Doing?
60. Why Do Manufacturers with Foreign Trade Rights Want Agents?
61. How to Use Foreign Trade Company to Open Overseas Market?
62. What are the Difficulties in Collecting Money by Letter of Credit?
63. If Supply Cycle is Long, How to Control the Risk of Quotation?
64. What if Tax Rebate Policy Cause Prices Lower Than Costs?
65. Tips for Paying Commissions to Foreign Middlemen or Agents
66. Why Use Written Documents for Business Contacts?
67. How to Control the Risk of Export Quotes?
68. How to Trade in the Middle East While Controlling Risks?
69. How to Offer the CIF Price to Products with Long Supply Cycle?
70. The Main Situation of Foreign Trade Fraud
71. How to Handle Costs of Repacking Goods at Destination Port?
72. What If the Qualified Products Aren’t Enough to the Contract?
73. How to Handle the Return or Repair of Exported Goods?
74. What Should I Do with Insubstantial Complaints from Clients?
75. How to Handle Disputes in the Agent Export Contract?
76. What If Clients Ask Us to Replenish or Repair Products?
77. What if Clients Demand Compensation for Packing Damage?
78. Parts of Previous Goods Rusted, Clients Ask to Replenish Freely
79. Who Should Bear Import Tariff and VAT for Free Replenishment?
80. What If the Goods Deformed the Container Before Shipment?
81. What If Customers Threaten to Punish Us for Quality Problems?
82. Why Do Customers Never Feed Back on Our Quality?
83. What If Customers Ask Compensation for Damaged Products?
84. What If the Forwarder Delay Delivery, Bringing Extra Costs?
85. What If Customers Have Placed Orders with Wrong Quotes?