ChatGPT & AI in
Procurement Course

Free Preview Lesson

Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Price Negotiation — The Ultimate Guide

Key takeaways
  • Price negotiation enables procurement teams to strategize their spending plan, leading to optimized finance activities.
  • Careful approaches benefit procurement teams who want to build partnerships and information in negotiations
  • On the other hand, aggressive approaches benefit procurement teams needing to expedite the process.

Price negotiation allows buyers and sellers to get the price that they want when discussing future work, projects, or collaboration. However, how do you negotiate prices effectively?

In this article, we will define what price negotiation is. We will discuss how you can negotiate prices effectively and how to prepare for price negotiation. Additionally, we will tell you some tips to prevent a heated price negotiation.

Once you are done reading this article, you will have a great understanding of how you can negotiate prices effectively. Thus, it will allow you to position yourself effectively when you are negotiating the price. So without further ado, let us now start on unveiling price negotiation!

I have created a free-to-download negotiation preparation toolkit template. It’s a PowerPoint file that can help you negotiate prices for better deals. I even created a video where I’ll explain how you can use this template.

Price Negotiation: What is it?

Everyone in the procurement industry is familiar with price negotiation as it is a usual occurrence when procurement professionals purchase materials or supplies. During price negotiation, there are two roles that arise: buyer and seller. 

The purpose of price negotiation is to discuss a price that is agreeable or acceptable to both parties. Upon the end of the negotiation, either accept or lose the deal. 

In a price negotiation, procurement professionals also face another dilemma of losing the sale. Therefore, the obvious BATNA will be to walk away from the deal. However, there is always room for haggling strategy. Your BATNA will help you calculate your reservation price which is the highest price you are willing to pay in the negotiation. 

It is also important to be polite and sincere throughout the negotiation process. You must also be willing to accept no for an answer. 

Effective price negotiation skills are critical for every procurement professional. Thus, our Negotiation Course For Procurement Professionals can help you master your skill in negotiating prices effectively. Enroll now and be the best negotiator that you are meant to be!

How to Negotiate Price?

Do you want to pay less or sell more in a negotiation, then these are some negotiation techniques that you can use in negotiation:

1. Ask questions as a negotiating skills

When you are asking the price and the other party tells you the price, you can stop for a moment, look surprised, or even shocked, and tell if that is the best that they can do. 

After that, you can remain silent. If there is any flexibility in the price, which usually occurs, the other party will drop or raise their offer immediately. 

If they lower the price in response to your “is that the best thing you can do,” you can then say, “is that the very best you can do?”

This technique adds an element of urgency and triggers the fear of the other party losing the sale. 

2. The nibble negotiation 

Nibbling is one of the most common tactics used in negotiation. In nibbling, you ask for small items, one at a time, and agree on each until you get a lot. Because each request is small, which seems painless for them, the other party may give in. 

3. Lowballing

When they ask you for $500, you can lowball your answer and say, “ I will give you $450 cash right now.”

Whenever you offer cash instantly, the resistance of the other party diminishes drastically. This is due to three obvious reasons which are reduced inventory, no credit card fees, and the feeling of instant gratification. 

    Preparing For Price Negotiations

    Of course, you should not bring a knife to a gunfight. Going into a negotiation well-prepared is one of the best ways to increase your desired outcome. here are some ways to prepare for your upcoming negotiation:

    1. Choose a strategy

    You should decide on a strategy to use in a negotiation so you know how to approach the other party once the negotiation starts. 

    Having a strategy shows the other party that you know what you are doing and gives you a predefined structure for your dialogue.

    2. Know what you want to achieve

    You should know what you want to achieve before you enter a negotiation to properly steer the negotiation in the proper direction. 

    Setting the price that you want and refusing to settle for anything less strengthens your position and encourages the other party to adjust to your requirements.

    3. Due diligence

    Due diligence is a way to investigate the other party to know vital information about them. When you perform due diligence, you discover useful information relating to what the other party wants from you or how much they are willing to pay for something. 


    Tips on Preventing a Heated Price Negotiation

    Remember not to lose your cool. Here are some tips on preventing a heated price negotiation.

    1. Plan

    Plan all your negotiations in detail. Planning is an important aspect of successful negotiation. Additionally, if you plan things, you will know what to avoid to prevent a heated price negotiation.

    2. Negotiate on value

    You should know the value of what you are selling and the issues that you can negotiate. You should be prepared to communicate all the tangible value of those issues to your customers.

    3. Shared interest

    You should not forget that the other party’s at the table because he or she has something to gain from it. Use this shared interest as a common ground when things go off track.

    4. Trade

    You should ensure that you get something of equal or greater value if you give something up. Know the value of the negotiable items on the table. If you do not know the cost of the trades you are making, you may give away more than you should.

    5. Walk away position

    Know the issues that you are not willing to negotiate and at what point it is not worth it to continue the negotiation. You should remember that you can always walk away from the negotiation, especially if you reach an impasse.

    6. Not taking it personally

    Everyone has a job to do. Getting defensive will only serve to increase the distance between you and the other party. You should know that you are talking about your and the other party’s interest in the negotiation and not their personal matters. 


    Mastering price negotiation is crucial for procurement professionals. Effective techniques, preparation, and maintaining a collaborative approach ensure successful negotiations. Our “Negotiation Course for Procurement Professionals” is tailored to hone your skills for optimal results.

    Frequentlyasked questions

    What is price negotiation?

    It is a discussion seeking to get an agreeable or acceptable price for both parties.

    Why is it important?

    Negotiating price is important so you can get the best possible price you can get in the negotiation. Thus, allowing you to save more and invest the additional funds for other things that will enable your company to grow more.

    How do you negotiate prices?

    The golden rule in negotiation is to get the right information about the other party. If you know their background and interest, you will surely know how to position yourself which will allow you to steer in the direction where you want the negotiation to go.

    About the author

    My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

    Marijn Overvest Procurement Tactics