How do you handle price increases, contract renewals, and service changes?

1 Know your alternatives

Before you enter any negotiation, you need to know your best alternative to a negotiated agreement (BATNA). This is the option you would choose if you can't reach a satisfactory deal with your current vendor. Your BATNA could be switching to a different vendor, finding a substitute product or service, or doing it yourself. Knowing your BATNA helps you set your walk-away point and avoid accepting unfavorable terms.

2 Communicate your value

Another way to increase your bargaining power is to communicate your value to your vendor. This means highlighting the benefits of working with you, such as your loyalty, volume, referrals, or feedback. You can also leverage your reputation, network, or industry influence to show that you are a desirable customer. By communicating your value, you can create a win-win situation where both parties feel valued and respected.

3 Research the market

Before you accept any price increase, contract renewal, or service change, you need to research the market and compare your vendor's offer with other options. You can use online tools, industry reports, or professional contacts to gather information and benchmark your vendor's performance. This will help you identify any gaps, inconsistencies, or opportunities for improvement. You can also use this data to support your arguments and counteroffers during the negotiation.

4 Ask for justification

When your vendor proposes a price increase, contract renewal, or service change, don't just accept it at face value. Ask for justification and evidence to back up their claim. For example, you can ask them to explain how they calculated the price increase, what value they are adding to the contract, or how the service change will affect your operations. By asking for justification, you can challenge your vendor's assumptions, uncover hidden costs, or discover potential savings.

6 Build rapport

Finally, don't forget to build rapport with your vendor throughout the negotiation process. Rapport is the feeling of trust, understanding, and connection that you establish with another person. You can build rapport by using positive language, showing empathy, listening actively, and finding common ground. By building rapport, you can reduce tension, increase cooperation, and strengthen your relationship with your vendor.