Quite often as a buyer I have faced issues while finalisation of source for a product when the particular product is technology dependent. You have limited options to choose from and you have very limited room for negotiation of final price.
Traditional method of price estimation and negotiation like differentiating cost in RM (Raw Material) , Process Cost and Overheads and Profit doesn't hold good and neither you have multiple suppliers where you can go for competitive bidding to reduce the cost.
Essentially you are dependent on the supplier to give you the correct cost. Still how you can determine the correct cost.
1. Historical buying pattern : The first thing to look at is to see the cost pattern of similar products. This will help in achieving some cost estimation and perhaps helps in determining the cost drivers.
2. Dependency of the supplier: Determining the dependence of the supplier on your organisation or that particular product. It will help you increase your BATNA in the negotiation.
3. Look for competitors: Though the toughest part for this kind of component, yet the idea is to use them as leverage during negotiation. They may not be 100% match but yes they can be helpful as part of negotiation.
4. Understand the product: The knowledge about the product, volume, no. of years of usage, maintainence requirement or other cost drivers help in determining the negotiation points and helps in determining the correct cost.
The idea as always in any negotiation is keep pushing the supplier and with above inputs, determining the correct cost becomes slightly easy.
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