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Step 1: Understand the Bigger Picture

Emma didn’t react immediately. Instead, she took a step back to analyze the situation. She reviewed the supplier’s cost breakdown from past contracts and compared it with market data for raw materials. She found that while raw material prices had increased, they hadn’t risen enough to justify a 15% hike.

She also studied her company's long-term relationship with the supplier and the potential impact of switching suppliers. This supplier had been reliable, with quality products delivered on time—something she didn’t want to jeopardize. However, she needed them to understand that a blanket price hike wasn’t sustainable.

Step 2: Segment and Carve Back

Emma scheduled a meeting with the supplier’s account manager, Klaus. During their conversation, she employed the carve-back technique by segmenting the price increase into its components.

“Let’s break this down,” Emma said, pulling out her notes. “You’ve cited raw material costs as the primary driver of the increase. Can we isolate that impact from other cost factors like labor, logistics, or your operational overhead?”

Klaus hesitated but agreed to the exercise. Together, they worked through the numbers. Emma demonstrated that only a fraction of the proposed increase was tied to genuine material cost inflation. The rest, she pointed out, appeared to be based on anticipated—not actual—rises in other expenses.

Step 3: Find Common Ground

Having carved back the inflated assumptions, Emma shifted the conversation toward solutions.

“Given the actual data,” she suggested, “let’s recalibrate the increase to reflect what’s happening in the market. And, to make this sustainable for both of us, can we agree to a step-down mechanism if material costs decrease in the coming months?”

Klaus seemed intrigued. Emma’s transparent approach didn’t just challenge the increase; it reframed the discussion around partnership and fairness. By the end of their meeting, they agreed on a 7% increase, with a clause to revisit prices quarterly based on market conditions.

Step 4: Return to Market Price

True to her word, Emma monitored the market closely. Within three months, raw material prices began to stabilize, and she reopened negotiations. Armed with updated data and the agreement they had made, Emma successfully convinced Klaus to lower the prices back to pre-increase levels.

The Outcome

Emma’s use of carve-back negotiation not only saved her company from an unwarranted budget hit but also preserved a critical supplier relationship. By focusing on transparency and collaboration, she turned a difficult situation into a win-win.

Her efforts didn’t go unnoticed. At the next quarterly meeting with her leadership team, she shared the story of how she broke the price increase curve using strategic negotiation. Her manager commended her creativity and resilience, and she became the go-to expert for tackling similar challenges across the organization.

Takeaway:
Emma’s story illustrates how carve-back negotiation can be a powerful tool to challenge price increases while fostering long-term partnerships. It’s about digging deeper, segmenting the problem, and finding collaborative solutions—skills any professional can master with the right training and mindset.