When looking at the economy right now, things are tough.
And most executives agree.
According to BCG's annual survey of over 570 C-suite leaders, one-third list cost as their most critical priority—up 8 percentage points from last year.
That priority makes sense when you consider companies achieved only 48% of their cost-saving targets in 2024.
This reality presents many new challenges for procurement and sales teams at the negotiation table.
Achieving meaningful cost savings while maintaining stakeholder relationships requires a systematic approach to negotiation—whether you're on the procurement side trying to reduce costs or the sales side working to protect margins.
Here are five strategies procurement and sales teams can implement immediately:
STRATEGY #1: USE VALUE-BASED CONVERSATION FRAMEWORKS
Rather than opening with price discussions, successful sales and procurement teams first establish the full scope of value being exchanged.
This means mapping all elements of the relationship—including quality, delivery performance, technical support, payment terms, and innovation contributions.
Sales Example:
When faced with a price-sensitive client comparing your product to lower-priced competitors, don't immediately offer discounts.
Instead, shift the conversation to long-term benefits like personalized onboarding and dedicated account management.
A skilled sales negotiator might say: "I understand price is important. Let's look at the complete picture of what we offer—our 24/7 technical support, 99.8% on-time delivery record, and customized implementation that reduces your onboarding time by 40%. These elements create significant value beyond the initial purchase price."
Procurement Example:
Rather than demanding a 10% price reduction from a strategic supplier, a procurement professional might open with:
"We've been partners for three years now. Your quality metrics are excellent, but we've noticed opportunities to improve delivery schedules and technical response times.
Let's discuss how we can optimize these areas while also addressing our cost targets for this quarter. We're particularly interested in exploring inventory management options that could benefit both organizations."
Doing so moves the conversation away from price only to focus on the entire value of the deal—a much better (and creative) approach.
STRATEGY #2: DEEPLY UNDERSTAND SUPPLIER ECONOMICS
Meaningful cost negotiations require insight into your supplier's business model, cost structures, and profit drivers. This intelligence allows procurement and sales teams to target areas where suppliers have genuine flexibility versus where margins are already thin.
Progressive teams build cost models for key categories, identify suppliers' key profit drivers, and develop questions that reveal economic realities.
For example:
- A manufacturing procurement team might analyze raw material indices for their packaging supplier, allowing them to request price adjustments only when input costs genuinely decrease.
- A retail buyer might map a vendor's seasonal production cycles, then negotiate volume discounts during low-utilization periods when the supplier is eager to fill factory capacity.
- An IT procurement professional might ask targeted questions about a software vendor's implementation costs versus licensing revenue, enabling a conversation about reducing total cost by accepting a longer implementation timeline.
This approach transforms conversations from adversarial price battles to collaborative explorations of mutual efficiency.
STRATEGY #3: EFFECTIVELY WIELD TENSION
The best negotiators understand that tension isn't something to avoid—it’s something to harness and embrace.
At RED BEAR, we help people see (and use) tension across three dimensions: competitive, collaborative, and creative.
The competitive dimension acknowledges that buyers and suppliers have different interests that create natural tension. The collaborative dimension recognizes areas where both parties share common goals. The creative dimension explores innovative approaches to meeting both sides' needs.
By deliberately managing these three dimensions, sales and procurement teams can maintain a healthy negotiation dynamic that drives results without damaging relationships. Balancing competition with collaboration creates the optimal tension for productive negotiations.
STRATEGY #4: BUILD LEVERAGE IN LIMITED-OPTION SCENARIOS
Here’s the thing: many teams face scenarios with constrained supplier options.
Several factors contribute to this challenging reality:
- Industry consolidation has reduced the number of viable suppliers in many categories
- Specialized technology often requires working with proprietary providers
- Geographic limitations or import restrictions can limit access to alternatives.
In these scenarios, traditional negotiation leverage—the ability to credibly walk away—is compromised.
Yet successful procurement teams adapt their approach using several effective strategies, like increasing suppliers' perception of their importance as a customer, developing viable alternatives even in constrained markets, creating competition for different portions of the business, and emphasizing future opportunity value over current spend.
Some smart procurement teams might even develop "self-sourcing" capabilities for components of the overall solution when possible. Many collaborate with product development teams to design specifications that allow for alternative suppliers in future iterations.
What does this look like on the sales side?
Sales professionals can strengthen their position by highlighting unique value propositions that set them apart from limited competition. This starts with demonstrating deep understanding of the buyer's specific needs and challenges, then offering flexible solutions or bundled services that increase switching costs.
Effective sales negotiators also leverage existing relationships and success stories within the buyer's organization to build credibility and create internal champions for their solution.
STRATEGY #5: ATTAIN CROSS-FUNCTIONAL ALIGNMENT
Cost-focused negotiations often fail due to internal misalignment. When different stakeholders send conflicting messages to suppliers, negotiation power evaporates.
For example, say the procurement team negotiates aggressive payment terms while the operations team simultaneously communicates urgent delivery needs to the same supplier. The supplier could leverage this disconnect to maintain higher prices in exchange for expedited service.
Without cross-functional alignment, the procurement team loses leverage as the supplier knows operations will override cost concerns to meet production deadlines.
On the sales side, a rep could offer flexible implementation timing to secure a better price, only to have the customer success team promise rapid deployment during onboarding discussions. This misalignment could “force” the sales team to honor the accelerated timeline without the premium that should have been charged, eroding margins and creating internal tension between departments.
Top-performing organizations implement systematic stakeholder alignment processes. This includes:
- Documenting must-haves versus nice-to-haves
- Establishing clear decision rights
- Developing response plans for tactics aimed at dividing internal teams.
When procurement, operations, finance, and legal work in unison toward shared goals, suppliers can't exploit internal divisions.
NEGOTIATION EXCELLENCE DRIVES COST MANAGEMENT SUCCESS
Cost management isn't just about squeezing suppliers or defending against procurement pressure—it's about creating sustainable value through strategic negotiation approaches.
The most successful organizations recognize that these five strategies work together as part of a comprehensive negotiation system, not as isolated tactics.
For procurement teams, implementing these approaches leads to meaningful cost savings without damaging critical supplier relationships. For sales professionals, these strategies protect margins while demonstrating value that justifies premium pricing.
Not sure how to put these strategies into practice? RED BEAR's specialized negotiation training provides the frameworks, skills, and practical experience needed to execute these strategies consistently.
Our proven methodology has helped thousands of professionals transform their negotiation outcomes through customized workshops, coaching, and reinforcement.
Ready to transform your team's negotiation capabilities? Contact RED BEAR today to discuss how our tailored solutions can drive immediate and sustainable results for your organization.