Unit 3: Price Determination and Negotiation

💰 Price Determination and Negotiation

Price determination is the process of setting the right price for a product or service, while price negotiation involves discussing and adjusting price terms between the buyer and seller to reach a mutual agreement.

Objectives of Pricing

Factors Influencing Pricing

Types of Pricing Strategies

In Short, Effective price determination and negotiation ensures a balance between customer satisfaction, market competitiveness, and business profitability. Pricing must align with market conditions, customer expectations, and business goals.

Negotiation in Sourcing

Negotiation in sourcing refers to the process of discussing and finalizing the terms of a purchase between a buyer (organization) and a supplier. The goal is to reach a mutually beneficial agreement on price, quality, delivery, payment terms, and other contract elements.

🛒 Examples of Negotiation in Sourcing:

Types of Negotiations in Sourcing

Key Objectives of Sourcing Negotiations:

• Achieve best value for money
• Ensure timely delivery
• Maintain required quality
• Develop long-term supplier relationships
• Minimize supply chain risks

In Short, Negotiation in sourcing is critical for cost control, efficiency, and building strong supplier relationships. Skilled negotiators focus on data, collaboration, and communication to achieve the best outcomes.

The Process of Negotiation

Negotiation is a structured process involving several steps to reach a mutual agreement between parties. Here's a breakdown:

Skills for Successful Negotiating

Obstacles to Negotiation

In Short, The negotiation process requires preparation, clear communication, and problem-solving skills. By understanding potential obstacles and developing strong negotiation skills, businesses can secure better deals, build stronger supplier relationships, and improve operational efficiency.