How to Negotiate With Vendors and Contractors for a Good Deal
Hiring vendors and contractors can be a daunting process. Whether you're hiring out for a home improvement project, like window replacement or large-scale renovations, or planning a large event, like a wedding or festival, the stakes are often pretty high and you want to make sure you have the best people on the job. If you're under time pressure, you might be tempted to just go with the first option you find, but negotiating with prospective vendors or contractors is a step you shouldn't skip. Not only can this afford you a better deal, but the process of negotiation can also make you more confident that your timeline and needs will be met—and that you're really getting your money's worth.
So, we've asked experts for advice on how to get a proper quote, negotiate for the competition's lower rate, and communicate effectively so that you can score the best deal possible.
Ask for a well-explained quote
Before booking any service, or hiring anyone to work for you, it's important to ask for a quote. "Be sure it's detailed, and if there's an expiration date for that quote, make sure you understand that clearly as well," says Julie Ramhold, consumer analyst with DealNews.com, a shopping comparison site.
Also, she says the estimate must be detailed and clear. "Don't just take a simple 'We can do the work for $X' quote—make sure it's itemized, in writing, and notes exactly what it will cover," she says.
Not only will this help you with comparing vendors and contractors, Ramhold says, but it can also decrease the risk of running into trouble with them down the road, whether you have a simple misunderstanding or if they try to change the quote.
Establish one point of contact for your communications
If you anticipate that you're going to be going back and forth with the company or professionals you're hiring, the best thing you can do is solidify one point of contact, says Ramhold.
"Whether it's by email, phone, or even text message, this ensures that you're dealing with one person so that if any issues arise or you have further questions, they may be more ready to provide answers," she says.
If you end up reaching a different person each time you have a question or need to discuss something, you may find that you have to repeatedly explain your situation. "If it's a simple job, that might not be so bad, but if there are multiple things you want taken care of, this can get frustrating quickly," Ramhold continues. Additionally, by working with only one contact, that means that if you are able to successfully negotiate prices down, you're both aware of the situation and won't be subject to any unpleasant surprises from another worker who just isn't in the loop, she says.
Offer a deposit
Depending on the kind of work you're pursuing and how much you'll be paying, Ramhold says it may help you negotiate the price down if you offer a deposit. "Many businesses may already require this, but if they don't—or if you're willing to put down a bigger deposit for a smaller bill overall—then this may be a simple move that will make them more confident in working with you and more likely to be flexible on pricing and terms," she says.
Allan Stolc, founder and CEO of Bankly, who has handled negotiations with vendors in various industries, seconds this advice to use bargaining power to get bigger discounts from your vendor. "If there's one thing a vendor wants from their customers that is to be financially stable to reduce the risk of writing off their receivables due to bad debts," he says. "Leverage this by flexing your cash reserve and being proactive with handing over a significant cash advance, enough for the vendors not to refuse." Before completing the transaction, ask for a lower quote in exchange for settling a huge upfront payment, he advises.
Line up comparative quotes
If it's an edge in negotiations with your vendor that you're looking for, line up quotes from competitors in advance. "This way, you will have the opportunity to make comparisons, and the pressure will be on the vendor to prove their worth as well as their prices," says Eva Taylor, content manager at WP Buffs.
But Taylor cautions there could be a caveat. "There's one risk to this approach," she warns. "If the vendor is indeed able to prove that the competitors you are referring to lack in quality and delivery standards, chances are you may have to go along with their offer."
Do your research
Researching different businesses and professionals in the same field will help you understand what others are charging, and gain knowledge about things like bulk costs, and what kind of markup they may be incorporating. "From there, you'll have a better picture of the overall situation and should have a good idea about how flexible the vendor should be able to afford to be," Ramhold says. But, she cautions that just because they should have a certain amount of flexibility doesn't mean they will.
The circumstances regarding each vendor can vary, so keep that in mind. "Based on their own situation, one vendor may not be able to offer as deep of a discount as another in the same field for whatever reason, while some may just not want to," Ramhold adds. "Having more information before you go into negotiations is never a bad thing, and it should make you more confident in your decisions."
Another perk of doing your research is that you may find more vendors in the process. This means that if you have one that isn't willing to work with you, or can't for whatever reason, you have backups on hand, Ramhold says.
Coming prepared with research also proves that you're a savvy consumer. "This is a big thing with any negotiations," she says. "If you go into a business discussion showing you know things about the industry and how it works, the good [vendors] are going to feel more confident in doing work for you because they'll see you've put thought into this rather than looking for a quick fix."
Furthermore, being an informed consumer can help you weed out vendors that aren't the best pick and save you time, money, and aggravation. "You're signaling to the shady vendors that you're aware of how things work and they're going to know that they can't pull one over on you," attests Ramhold. "This will hopefully prevent you from having issues and allow you to find a vendor that can legitimately do the work you need on the budget you have."