Question: “What kind of discount should one expect from a vendor?”
HIS Pros Answer: Depends on how and when you ask the question:
- If you announce a “Vendor of Choice,” telling a vendor they just won your selection process, and now you want to sit down and deal, you’ll be lucky to get a few percentage points off of their list price: 5 to 10% at most.
- If you ask all vendors while still in your selection process to give a discount to become a “finalist,” you should see some reasonable numbers like 10-20% or more.
- If you announce two “finalists” and ask them both for discounts to become the winner, you’ll start to see some real numbers, 20-30% or more.
Saddest thing we consultants here when giving a “loss report” to the losing vendor is “what price would have won us the deal?” That is precisely the number you should tell each vendor before you make your final decision: you give them the price for which you’ll give them the deal, and that’s the best number you’ll see.
Remember, a selection process costs a vendor substantial sums, $100K or more for salaries and out-of-pocket expenses for demos, site visits, answering RFPs, dinners, flights, etc. If they lose the deal, that money is all wasted. A hospital has more bargaining power than it thinks it has, but you have to keep the selection/negotiations competitive in order to garner the best price.
Of course, there are a handful of vendors who do not discount, but only sell at list price. This is an indication of what their corporate philosophy will be in the implementation and service mode, so dock them accordingly. What kind of “partner” is it that only follows the corporate rule book, when it comes to prices or any other matter? A partner compromises, meets you somewhere in the middle, doesn’t insist on having everything go their way. So learn from price negotiations just what kind of vendor/partner you’re picking and chose accordingly.