Negotiating the Price. UNIT. Learning Objectives Understand the price in international business Talking about price adjustments, discounts and concessions Understanding the techniques in price negotiation Writing counter-offer letters. 9. 价格磋商. CONTENTS.
discounts and concessions
◆ Warm-up Practice
◆ Speaking Task
◆ Reading Task
◆ Writing Task
◆ Follow-up Practice
We need to discuss some questions about what we are going to learn in this unit.
Sure, that’ll help us understand better about what we are asked to do.
Canadian Dollar RMB
New Zealand Dollar SFr
Hong Kong Dollar EUR
Swiss Franc Dollar CAD
Euro Dollar SGD
Great Britain Pound USD
Singapore Dollar AUD
Japanese Yen NZD
Australian Dollar GBP
US Dollar JPY
1.What is trade terms or price terms?
2. When negotiating the price of a product, what are the
key elements to be considered?
Trade terms also referred to as "price terms" or "delivery terms" are a set of uniform rules codifying the interpretation of trade terms defining the price composition and the rights and obligations of the buyer and the seller in international transactions.
Trade terms are key elements of international contracts of sale, since they tell the parties what to do with respect to:
♦ delivery terms ( carriage of the goods from the seller to the buyer and division of costs and risks between the parties) ;
♦ price terms (stipulating what are included in the price the buyer paid to the seller, e.g. cost, freight, insurance, export and import clearance fees, etc. ) ;
♦ delivery obligations (what documents should the seller provide, e.g. bill of lading, insurance policy, etc. ).
FOBCFR DDU FAS CIF DES DEQ DDP
工厂 仓库 敞车 机场 集装箱 码头 码头
火车站 堆场 CY
Exporting CountryImporting Country
Unit price comprises the employed currency, unit price, unit quantity, and trade term.
每公吨 100 美元 CIF纽约
Unit quantityUnit priceEmployed currencyTrade term
USD 100 per M/T CIF New York
In this part you are going to listen to a passage and a dialogue. Listen and try to finish the exercises while listening.
Are you ready?
9.1.1 Listen to the passage and write ‘T’ if it is true or ‘F’ if it is false for each statement.
1) Why did Bill come to visit Mary?
He came to talk about Mary’s plastic card order for the next year.
2) Why did Bill say that they had to increase their prices a little?
Because of inflation, increase in cost of raw materials and improved
3) What will be the minimum order for the cards if the price can be kept at
the same level?
4) What was the last year’s unit price for the cards?
5) What was the problem with the last year’s cards?
Around 3% were faulty.
6) Will Mary place an order for the cards next year?
In this part you are going to read two dialoguesin pairs and then you will be asked to answer some questions about what you have read.
1) How did Mr Gao justify his rise in price?
2) What was the counter-offer made by Mr Keith?
3) Did Mr Gao accept Mr Keith’s counter-offer?
4) What was the further price concession made by Mr Gao?
5) Why did Mr Gao make this concession?
In order to encourage future business and as a gesture of friendship.
6) How long will this offer remain firm?
1) How did Mr Huang justify his rise in price?
2) What was the range of price adjustment Mr Huang expected?
3. How will the market react to such a price according to Mr White?
4) What did Mr White threaten to do?
5) Why did Mr Huang agree to raise his price by 18%?
6) What’s their final conclusion?
1. What do you concern most about products as a buyer?
2. How do you judge whether a certain product is high in price?
3. Why and how do we defend our price as a seller?
1) What situation does every salesperson eventually confront?
He is afraid his price is too high for a successful deal.
2) Why are many salespeople afraid to defend their price?
Because they believe that will drive away customers.
3) How should we justify our price according to the passage?
We should give our price legitimacy, focus on the value of our product/service, and assure our customers of our sincerity.
4) What advice does the passage give for making concessions?
Don’t make unilateral concessions. Whenever you give something away, get something in return.
5) Why and how do we qualify our prospective buyers?
There are always some customers out of your price range. When you’re suspecting, simply ask: “What kind of budget are we looking at?” or “What range are we looking at here?”
6) How can we satisfy our customers without lowering our price?
The advices are:
(1）Be a good listener. Allow them to get their gripes about your price off their chest. They will thank you for being patient with them.
(2）Help them to accept your fee by providing reasonable justification.
(3）Sell your unique strengths.
7) Can you give some advice for defending your price?
In this part you are going to learn how to write a letter of counter-offer
A satisfactory letter of counter-offer should cover the following points:
1.Express the buyer’s thanks to the seller for the offer.
2. Express regret at the buyer’s inability to accept.
3.Make a counter-offer if, in the circumstances, it is appropriate.
4. Express hopes of mutually beneficial business cooperation.
Thank you for your letter about the offer for the bicycles. Although we appreciate the quality of your bicycles, we regret to say that their price is too high to be acceptable. Referring to the Sales Confirmation No.89SP-754, you will find that we ordered 1000 bicycles with the same brand as per the terms and conditions stipulated in that Sales Confirmation, but the price was 10%lower than your present price. Since we placed the last order, price for raw materials has decreased considerably Retailing price for your bicycles here has also been reduced by 5%.Accepting your present price will mean great loss to us, let alone profit. We would like to place repeat orders with you if you could reduce your price at least by 2%.Otherwise, we have to shift to the other suppliers for our similar request.
We hope you take our suggestion into serious consideration and give us your reply as soon as possible.
Thank you for your letter of 20 July 2006. We are disappointed to hear that the price for our flame cigarette lighters is too high for you to work on. You mention that Japanese goods are being offered to you at a price approximately 10% lower than that quoted by us.
We accept what you say, but we are of the opinion that the quality of the other makes does not measure up to that of our products. In these days, we have received a lot of enquiries from European buyers and we believe our price is fixed at a reasonable level. Although we are keen to do business with you, we regret that we cannot accept your counter offer or even meet you half way. The best we can do is to reduce our previous quotation by 2%. We trust that this will meet with your approval. We hope you would accept this price and place your order at an early time.
Task 1Compose a letter of counter-offer, asking for price reduction based on the following terms in the offer you have received from the seller.
Commodity: Blue Sky Brand Men’s Shirts
Specifications: White, long sleeves, made of 80% rayon
and 20% cotton
Sizes: L 20%, M 50%, S 30%
Packing: Each in a polybag, 10 dozen to a carton
Quantity: 2,000 dozen
Price: US$400 per dozen CIF New York
Shipment: October/ November, 2006
Payment: By irrevocable L/C payable by draft at sight
We will practice what we have learnt in this unit.
Yes, let’s do it!
Practice makes perfect
1. A: You’ve raised the price! May I know what has caused the increase?
2. A: Our users are under the impression that your prices are usually on the high side, compared with those of other suppliers.
3. A: What would you say to reducing your price by 10%?
4. A: We expected the price to be lower.
5. A: ________________________________________________
B: Oh, I’m afraid that won’t do. It simply can’t stand such a big cut.
6. A: _________________________________________________
B: If it’s a large order, a discount is possible.
7. A: I’m afraid we can only offer a 5% discount.
8. A: We hope that you’ll take the initiative and bridge the gap.
9 . A: ________________________________________________
B: You can’t take price separately from quality.
10 . A: To get business under way, we take your price.
1) If the price is high
A: The price is twice of the other countries(其他国家的两倍).
B: It is much higher than that of other suppliers (其它供货商).
C: I’m afraid your price is on the high side (偏高). .
2) If the price is reasonable
A: Yes, the price is realistic (合乎实际的).
B: It is a (n) reasonable / feasible / practical / attractive price.
C: Considering the rise of the cost of everything, this price reasonable / still reasonable /
within our acceptance.
3) If the price is not acceptable
A: We can’t accept it.
B: The price is beyond acceptance / our ability.
C: I’m afraid, the price is too high to be acceptable/ unacceptable / unattractive / impractical
4) If the price is acceptable
A: Yes, we can accept / takeit.
B: Yes, the price is acceptable, though it is higher than that of your competitors
C: Considering its high quality/grade/standard of your product, the price is still within acceptance .
5) If you think your price is low enough
A: The price has been reduced to its minimum / the bottom / its limit (极限).
B: Our price is moderate (适中).
C: Our price is practical and reasonable（实际的和合理的）.
3. Presentation PracticeMake a short presentation on one of the following topics. Try to find as much information as you can from different sources available for your talk.
Our prices still compare very favorably with those offered by other suppliers.
What I want to say is that you’ll stand no chance if you don’t bring your price into line with the world market.
I believe no manufacturer would accept your price because it can hardly cover our production cost.
Your price for the same products will be the highest in our market, which will no doubt result in shrinkage of the market for your products.
It is in view of our long-term business cooperation that we limit the increase to 20 %.
We hope you will reconsider your price and make a new bid, so that there can be a possibility of our meeting halfway.
If you place a large order, I think a discount would be possible.
A 3 % discount is the best we can offer, because the prices of raw materials have gone up lately.
Unless you can see your way to improve your price substantially, the chances of our closing the deal are rather slim.
In order to encourage future business and as a gesture of friendship, we are prepared to make this an exception by reducing our price by 5%.
1) Make a dialogue according to the following procedures:
offer — counter-offer — acceptance.
Seller: USD 2000 M/T FOB Shanghai.
Buyer: your price too high, our workable price USD 1800.
Seller: price here has suddenly increased to USD 1900.
Buyer: the best we accept USD 1850.
Seller: impossible to accept USD 1850 unless quantity increased by 50%.
Buyer: accept USD 1850 with quantity increase by 50% for prompt shipment.
David Cook’s Notes:
1) as a gesture of goodwill
2) as a new product
3) to open the market in our area
4) to place a large order
5) to get the business started
6) to make the price in line with other suppliers