Are You Leaving Money On The Table?
When we enter into a negotiation (in particular, a B2B deal), our usual (and natural) goal is to push for the very best deal possible.
We analyze our situation, detail our requirements, assess the competition and evaluate alternative options that meet (or come close to meeting) our needs.
We then negotiate: evaluating competing bids, unbundling pricing, conducting successive bidding rounds. All to drive costs down.
This is, of course, important when we're grappling with large deals. If you handle seven or eight figure spends, single digit percentage movements have meaningful implications for your bottom line.
At some point, though, we need to draw the line. At some point, you have to pick the best provider based on capability and - yes - pay more for that service.
Because value has a price.
Sure, you can always find a cheaper option, but, no matter what you tell yourself, no matter what you believe, no matter how you work the numbers, you always get what you pay for.
As the old saying goes, you can't buy champagne on a beer budget.
So, you need to leave money on the table.
Structure the final deal so that your supplier/partner makes a reasonable profit. Not an obscene amount - a reasonable amount. An amount that both of you can reasonably live with. An amount that leaves them satisfied that you are worth partnering with.
Because, everyone deserves to make a profit. To feel like they are valued. To know that they are being rewarded for their hard work.
Because, if you treat your suppliers well, they will do more for you.
They will think of you when they innovate.
They will bring you in first on new developments that will impact your business.
They will want to work with you again and again, and will invest accordingly in future years.
Leaving money on the table isn't stupid. It's smart. It's the basis for partnerships that ultimately move the needle.
(Hat Tip to my alma mater, the Ross Business School at the University of Michigan, for the seed of this idea from a recent alumni event.)