Capital Negotiations: A Three-Tiered ApproachSo, you received your TractManager Quote Analysis, and we recommend further discussion with the vendor prior to making a purchase decision for your organization. Now what?
Negotiating with vendors can be intimidating, daunting, and stressful. However, a three-tiered strategy can provide you the confidence you need to find real savings on any capital equipment deal.
1. Negotiating Pricing on the Equipment
Situation: The vendor’s quote offers a 40% discount; TractManager recommends a minimum 45% discount.
Strategy: Initiate negotiations with a deeper discount than the recommendation on the Quote Analysis. Generally, the highest discounts in TractManager’s Deals Database are not always the best discounts the vendor has offered. We know this, and the vendor knows this. If you know this, you can use this information as leverage in your negotiations. If TractManager recommends 45%, make an initial offering of 48% and stand your ground. Being aggressive at the outset will put you on the front foot and set the tone going forward.
Extra Credit: Don’t like negotiating with vendors? Allow our experts to negotiate on your behalf.
2. Trade-Ins and Promotions
Situation: The vendor’s quote offers standard discounting and includes trade-in credit.
Strategy: The first thing you’ll want to do is calculate the base discount by factoring out the trade-in credit. If the credit amount is stated on the vendor quote, TractManager Quote Analyses will do this for you. However, if the quote does not state the specific dollar amount the vendor is offering for your existing equipment, that should raise serious concerns about vendor transparency. In this case, request a revised quote that states clearly what base discount level is offered and what amount is offered for trading in your current equipment. Once you have these numbers, you can start aggressively negotiating a competitive base discount as discussed above.
Extra Credit: Do you think the vendor is low-balling you on trade-in value? Get the best Fair Market Value estimate on your existing equipment by contacting our Secondary Market specialists.
Some promotions may be available to you but are not offered by the vendor unless you ask. Often, promos may be offered for a limited time, so always ask what is available in your situation. Some promotions can even be added to the base discount you negotiated above. It will never hurt to ask for an additional 3% for your “Customer Loyalty” or a “Volume/Multi-System” discount based on your facility’s recent or near-future purchases.
Or, say you’re trading in a competitor’s equipment as part of your current deal. The vendor will be more open to offering higher discounts or trade-in value for taking a competitor’s equipment out of commission. Other common discounts: a 2%–3% “No Demo” discount if the vendor representative does not travel for an in-house equipment demonstration; “Package” discounts for purchases of related equipment; “Fiscal Period End” discounts near the end of fiscal quarters or years. It can pay to know when a vendor’s fiscal year ends: June? September? December? If you aren’t sure, ask TractManager.
3. Soft Dollars
Situation: The vendor quote includes non-capital charges such as freight, rigging, installation, and training.
Strategy: These charges are commonly found near the bottom of capital equipment purchase quotes and are rarely detailed. How are these charges calculated? Does the freight charge include delivery? Does “rigging” include labor, installation, and materials? Why are you charging me for “handling” equipment in your warehouse? The vagaries of these charges are myriad, so holding the vendor to account for detailed explanations can help you get some of these soft dollar amounts reduced or even removed from your quote. If they can’t explain it, why should you pay it?
Always—and we mean always—request initial training and freight/shipping at no charge. Every time, on every quote. Once you begin asking for these services at no charge, it will become second nature to you—almost reflexive. Do this so often that you’ll wear the vendor representatives down, and they’ll eventually stop putting it on future quotes altogether.
Next time you receive a Quote Analysis from TractManager, keep the above three levels of negotiation in mind and stay determined. Take notes: Write down the base discount you want, the trade-in credit you require, the promotions you have coming to you, and the soft dollar charges you want removed. Trust TractManager’s data, your ability to communicate your negotiation demands, and your steadfast confidence to realize the savings your organization deserves.
Top 10 Negotiating Strategies
Skilled negotiators are like musical virtuosos. They have an extensive repertoire of tactics from which to draw, and they know when and how to make them a part of their performance. But negotiating healthcare contracts for capital, purchased services, and IT services can test the artistry of even the most masterful negotiator.