Testing the Walk-Away Price

The Negotiating Challenge

Our client was re-negotiating an annual supply contract

  • The contract was with a large group which had made assumptions regarding our client’s 'normal' acceptance of upward annual price reviews.
  • An annual event was the 'this is our final price, and you’ll have to accept it' tactic.
  • Many of our client’s contracts are with similar monopoly or semi-monopoly suppliers, and so there is apparently limited room to move.

How ENS Helped

During the 3-day ENS training program, the 'Range' concept was discussed in detail.

  • Team members of the department had highly variable experience, and discussion centred on worked examples from the site.
  • There was reluctance to use several ENS techniques on perceived (semi)monopoly suppliers.
  • It was pointed out that nobody had tried such a direct challenge previously.
  • One more senior team member decided to test the limit of the suppliers 'walk away' price.

Outcomes

The client secured a $30,000/year saving on a 'standard' contract.

  • The specific team member gained enormous confidence to continue to use some of the techniques learned.
  • Further, other supply staff members were encouraged to do the same.