Fleur:'So, we could supply you with 40,000 components per month, for a two-year period at a unit cost of $4.35 per component.'
Bill:'There seems to have been a slight misunderstanding. You do realise that we want to order nearly a million components. And for that quantity, the price per unit does seem to be very high.'
Fleur:'We have taken into account the size of the order you require. And we have reduced the unit price markedly from what we normally ask. In terms of unit price, what were you thinking of?'
Bill:'Well, we were hoping for something around $3.40 per unit. Please bear in mind that we want to order nearly a million components, not a thousand.'
Fleur:'$3.40 per unit. I am afraid that is out of the question. If we sold it to you at that price, we would be making loss on every unit sold.'
Bill:'Well, we have received a quote from one of your competitors at $3.53 per unit.'
Fleur:'I am afraid that we can't match that. But If I were you, I would be asking myself how can they sell the components at such a low price? I would say that they are sacrificing the quality of the component for price. But there may be some room for manoeuvre. If you were to increase your order to 50,000 components per months, then we could lower the unit cost to $4.15.'
Bill:'For 50,000 units per month we wouldn't expect to pay more than $3.85 per unit. I would say that this price is the going rate for this quantity.'
Fleur:'I don't think that we could go that far. Under $4 per unit. It's not enough.'
Bill:'Well, could you meet us halfway? At $4 per unit?'
Fleur:'If that's $4 per unit, 50,000 per month for 2 years. I think we can do that.'