In the scenario, the main cost driver is suppliers' mark-up. The priority should be limit the margin to be added.
XYZ Ltd can agree "cost plus"contracts with their suppliers to ensure no IT product purchased exceeds an agreed maximum margin level. Procurement teams can use their benchmarking tools to police these contracts.
Cost plus contracts are agreements where the contractor's pricing is based on itemising allowable costs and then adding an agreed margin.
Market penetration pricing - pricing low to win a large share of the market Market skimming - pricing a new product high in order to make a large profit from the purchases by initial customers. This is an effective strategy only in the absence of competition.When competition appears, market skimmers usually drop their prices Premium pricing - usually pricing high because the market is prepared to pay extra for the kudos associated with the product, thanks to, say, a reputation for quality, or a highly fashionable brand name, and so on

Hypothetical questionsare used to explore scenarios or options without making a commitment. For example, asking "What if we were to increase the order volume?" encourages creative thinking and testing potential agreements without binding either party. This technique is valuable in theproposing and bargaining stagesof negotiation to explore trade-offs and build mutual solutions.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 3.3 - Effective Questioning Techniques in Negotiation

There are multiple sources of divergent positions that can arise in situations where money is exchange for goods and services. There are 2 different types of sources. Those that arise from the content or subject matter of the negotiation (what is being negotiated) and those that arise from the process of negotiation (how it is being negotiated).
Sources of divergent positions - the process of negotiation:
Table Description automatically generated

Line of best fits is the line that goes approximately through the middle of the data points with an equal number of data points above and below it. Line of best fits is a method of calculating medium value in statistics.
Standard terms and conditions are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders. While there may be conflicts regarding standard terms and conditions, they are about the content of negotiation, not the process.
Type of purchase: when buying organisation makes an decision to purchase an item, a buyer is faced with three possible scenarios. The item to be bought could be a straight re-buy, a modified re-buy or a new purchase. Decision on type of purchase is purely an internal decision.

The analysis of cost into fixed and variable enables organisations to determine their break-even point (BE) - the point where total revenue from sales and total cost exactly balance. All costs need to be covered by sale revenue in order for a company to make a profit. If you know your fixed costs and your variable costs then you can work out the minimum quantity of goods or services you need to sell to break even. Break even point is measured in volume and can be worked out graphically or via formulae:
Price - Variable costs = Contribution
Break even point (volume) = Fixed expenses/Contribution margin per unit In this scenario, the break even point (Q) is: 270,000/(180-126) = 5,000 To make a profit, the supplier needs to sell more than 5,000 units per month.
The BE point is thus an important determinant of flexibility of pricing for suppliers. Before BE is achieved there will be much greater reluctance to offer price concessions to customers than after BE is achieved.
LO 2, AC 2.1

Fixed costs are costs that do not vary directly with production volume. Staff salaries and building rents remain largely constant regardless of output levels and therefore meet the definition of fixed costs. Raw materials and temporary labour vary with production levels and are therefore variable costs. Warehouse logistics often fluctuate with throughput and activity, making them variable or semi-variable rather than fixed.
Understanding fixed versus variable costs is essential for buyers when assessing supplier justifications for price increases, enabling more informed and credible cost-based negotiations.
Reference: CIPS L4M5 Commercial Negotiation (CORE), 2nd edition - LO 2.2: Cost structures and cost analysis in negotiation preparation.