How to thank a vendor, while turning them down?

We've been soliciting bids from a few vendors, and one in particular went the extra mile to accommodate our needs, learn what our project really was about, and to work out a good solution. Unfortunately their offer comes with high start-up costs that make it infeasible for a test marketing production run, though it's very attractive in the longer term when we'll place much larger orders.

How can we tactfully turn them down, while still keeping a good relationship so that we can do business with them when the fit is better? I want them to come away from this process without a bad taste from the extra effort they extended in trying to win my business.

As always, the best option is to be up front. Tell them exactly what you've outlined above and they will certainly understand, and you have a basis for possibly moving forward at some future date.

Having said that, they must understand your situation and may have some manuverability to work a better deal with you. Are you sure that further negotiations aren't necessary / possible? If the only think that is keeping you from moving forward with them is price, let them know that and see if there is a way that you can come to terms.

Good luck! -e-

I know how you feel - I've had to do this several times in my day job.

I also know how it feels from the other side, where I've spent a lot of time on a sale prospect, so I always feel like I've wasted their time when I'm the one being sold to.

It's a reality of doing business though, and something I've come to accept from both sides of the fence - as long as you are polite, and let them know why it's a 'no', I'm sure they will understand. It wouldn't hurt to also mention that you appreciate their time and assistance (I know that always helps 'soothe' me when I'm playing the role of the vendor :)

Most companies won't want to ruin their future chances of a sale, so it shouldn't ruin your relationship.

Be up front with them as to the reasons you can't use them. Sometimes, they might even come back with a more equitable solution, given your constraints. You should also make sure to let them know that you would consider them for other jobs as they come up.

I would make a personal phone call and send a thank you letter to let the vendor know your decision. I would tell them what you told us. Something similar to:

Thank you for taking the time to go the extra mile to accommodate our needs, learn what our project really was about, and to work out a good solution. Unfortunately your offer comes with high start-up costs that make it infeasible for a test marketing production run, though it's very attractive in the longer term when we'll have much larger orders.

We wish you the best and look forward to possibly working with you in the future.

This leaves the door open for the future. They will be disappointed but if they want your future business they will also want to keep the door open with you.

I am sure referrals would always be appreciated.