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How to measure the level of "power" of a company's clients ? how to know if the dispose of a real negociation leverage Vs your company ?

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Question added by Deleted user
Date Posted: 2015/02/18
Deleted user
by Deleted user

Simple:

You need to calculate the % of your sales in their purchases (penetration rate)

And then to calculate the % of your products in their purchase and in their total turnover so you will be able to calculate what your company represent in their revenue in %/year.  

 

Then you need to calculate the % of your sales turnover this client represent in your turnover. And then in your revenue per year. 

 

Eventually you compare these two values in % and see which one is higher. And which company depends the most on the other and so who has a stronger negotiation power. 

 

Be careful, you also need to screen competition to make sure your client can't turn to one of your competitor and let you down if you put to strong pressure on price. 

 

This website can help you understand some stronger concept: 

http://www.investopedia.com/

 

Hope it is clear to you. 

Cheers

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