Effective Negotiation Skills

Case Study

Redecorating the office

The office needed a facelift and the office manager, Rashmi, had asked several builders to give her a quotation. She wanted to use Rangwala & Co, the company which looked after normal maintenance, but she always made a point of shopping around among suppliers.

When the estimates arrived, the maintenance company’s was for Rs. 1,00,000, while the others were between Rs. 79,000 and Rs.90,000. However, she arranged a meeting with Rangwala & Co to discuss the matter.

She explained she would like to appoint them but had anticipated a cost of not more than Rs. 80,000, and did have other estimates in line with that. The contract manager looked a bit shocked and responded that the company could not possibly do the job for that price. Rashmi had thought she was pushing her luck a bit, but responded: ‘Well, if you can’t do if for Rs. 80,000 what could you do it for?

The contracts manager spent more time prodding his calculator and replied that he could probably manage Rs. 93,000 if the job were guaranteed for that month. Rashmi tried again to reduce the price. She said that she could award them the contract for work to start immediately but, given that other quotation had been in line with her expected price level, could he not bring his price down to a similar level?

The contracts manager replied that their materials and workmanship were of high quality and that small repairs which came to light during the work would be included in the price. When Rashmi still looked worried and said nothing, he finally said that for an existing client, he supposed he could really trim the price, say to Rs. 93,000.

Rashmi smiled and said that she really would like to use Rangwala’s, but it was still considerably more than she had expected to pay. She would have a talk to the management committee, but asked that he also have a think about any ways to bring the price down. The contracts manager agreed and added: ‘Give me a ring after you’ve talked to them, they know our work is good, of course, and I expect they’d prefer to be dealing with one good supplier to look after the maintenance aspects. People usually find it’s like that. Maybe we can space out the payment, or something.’

Rashmi telephone Rangwala & Co the next day. She said that she had been authorized to pay half the fee in advance, and the balance within 30 days, if they could of the job for Rs. 85,000. The contracts manager said he had a really good look at his figures and he could give a little, but Rs. 85,000 just wouldn’t do.

Rashmi thought for a moment, and then said: ‘Well, I could give an immediate go-ahead, of course. What shall we do?’ the Rangwala’s manager also paused for thought, then he said that if they used good, but not the very best quality, paint he would be willing to split the difference and make it Rs. 87,500.

Rashmi responded that she thought that was a good idea – she knew she could still rely on the quality of their materials. She appreciated the effort he had gone to and she thought they could probably agree the contract and go ahead. She had also been trying to think through a few options, however. What she had been thinking was the perhaps Rangwala’s would also include in the work the painting of the front door and porch – ‘It’s only a little porch, as you know’. After a brief hesitation, and a wry smile, the manager agreed.