I Have a Great Relationship with My Vendor: My Pricing Must Be Good

This is one of those ‘untruths’ we all have told ourselves at one point or another.

Your relationship with your vendor has nothing to do with how competitive your pricing or contract terms are compared to other clients or to the industry. To not competitively bid a contract because you are concerned that your vendor may be upset should make you wonder—and if you are relying on your “relationship” to ensure competitive pricing, well that is probably wishful thinking.

The best relationships are the ones where both parties know what is expected of them. Both parties benefit – the vendor makes a fair profit and the customer gets excellent service. There is also constructive dialogue when issues arise and a reporting format that keeps score so both parties are aware of how things are running.

If you ask your vendors which accounts are their most successful, not the most profitable, if they are being honest, they will say where there was a competitive bid process and professional management was involved in structuring the deal. If you think about it, these are the same reasons your attorneys are hired.

By putting your vendor through a competitive pricing exercise, you will make that great relationship even better. If you are not comfortable doing that, you have a friendship, which hinders your ability to do what is best for your firm.