- You don’t need the added value and functionality so they need to be competitive price wise with the lower cluster.
- You can see the value, but the incremental cost of that value isn’t worth the incremental price they want to charge. Use the cluster price as the benchmark and negotiate the incremental cost for the additional value. You are willing to pay for additional value, but that incremental amount needs to be justified based on incremental value.
Let me show you how this would look. Create an the axis with price as your vertical line and value as your horizontal line. Now draw a diagonal like that separates the axis. That diagonal line is the value equivalence line.
If a Supplier is above the value equivalence line to the other suppliers, you might give them the message that they aren’t competitive on a value equivalence perspective and to win the business, if they can’t give more value they need to lower their price.