In our book Negotiating with Backbone, Reed Holden describes strategies and tactics designed to combat the Procurement Pricing Buzz Saw. The situation was described well in a white paper by Reed Holden Selling to Procurement: The New Normal.  I strongly urge you to request it and read it. 

Interestingly, while the white paper is entirely accurate, I would expand the pool of hard hitting negotiators to include more than Procurement professionals. Unfortunately, we see the Procurement Pricing Buzz Saw has broadened to the Purchaser’s Pricing Buzz Saw with the aggressive requests for discounts and price concessions coming from every function.

Let’s look at these 3 examples of tough negotiations outside of Procurement’s influence:

• A client's marketing team recently re-negotiated a web-development contract from $475,000 to $300,000. The person who lead the team was project owner and Director of Marketing. Procurement was initially involved but backed off when the team needed more concessions. 
• A client was negotiating with a distributor. The distributor wanted bigger discounts and a marketing allowance. The head of sales for the client said yes to the discounts, but they would have to pull back their own sales people from the field in that region.  The distributor quickly closed without further discounts or allowances. 
• A legal client won the contract for a significant piece of work. When they went in to close the deal, the General Counsel, who was outside the process, arrived and negotiated a 15% discount.

This is no secret. Anyone in selling knows that the discount request will happen, and this Pricing Buzz Saw is no longer the limited purview of procurement. For those of you who thought, “I don’t sell to procurement, so we are immune,” it is time to recognize the new world order. From my perspective, Backbone is more required than ever as the Poker Player tactics often employed by Procurement extend to more and more buyers in an organization. 

What’s been your experience?

We have long known that companies must adapt their approach to accommodate procurement’s involvement in the buying of the product or service.  The greatest opportunity for managing price in procurement negotiations is to train and prepare salespeople and executives for the “procurement pricing buzz saw.”Why not check out our white paper  Selling to Procurement: The New Normal.