Buyers in the United States were surveyed by the National Association of Purchasing Management, Inc. to rate the relative importance of various contractual elements for international negotiation. Respondents ranked quality assurance and timely delivery schedules as being significantly more important elements for negotiation than price. In other words, buyers realize that both quality and time can be more important than price as the key determinant when deciding to buy from one supplier or another. In their negotiations, exporters too often limit their discussions to pricing issues. Although pricing is a key factor in any business transaction, a number of other questions need to be clarified before any realistic business proposal can be considered.
Price is only one of many issues that have to be discussed during negotiations with buyers.
The subject of price should be postponed until other aspects of the transaction have been agreed upon. Besides customers' preferences, an exporter should assess competition from both domestic and foreign suppliers and be familiar with the prices they quote. The distribution channels used for the products and the promotion tools and messages required should also be examined. Making counter-proposals also requires detailed information on the costs of the exporter's production operations, freight insurance, packing, and other related expenses. After covering these issues, the exporter can shift the discussions in the final phase of the talks to financial matters bearing on the price quotation.