It happens on almost every RFQ. You send your specifications, you wait for the quote, and before the factory gives you a number they ask: what is your target price?
It feels like a collaborative question. Like they're trying to understand your budget so they can work within it. Like answering it will move the process forward faster.
It isn't and it won't. What the factory is actually asking is: how high can we price this before you walk away?
What the Factory Is Really Doing
When a supplier asks for your target price, they are engaged in a very specific exercise. They already know — roughly — what it costs them to make your product. They have a sense of the margin they want to make. What they don't know is how much room exists between their floor and your ceiling.
Your target price is the ceiling. The moment you share it, the negotiation is effectively over — you just don't know it yet. The factory will come back with a quote that is close to your target, slightly below it to give you the feeling of a win, and as far above their actual cost as the gap allows.
If your target is $4.50 and their cost is $2.80, you will receive a quote of $4.20. You'll feel like you got somewhere. You didn't. You left $1.40 on the table — potentially on every unit of every order for years.
The Anchoring Effect
What's happening here is a well-documented psychological phenomenon called anchoring. The first number introduced in any negotiation exerts a disproportionate influence on where the negotiation ends up. Both parties tend to evaluate subsequent numbers relative to the anchor — which means the anchor itself determines the range of acceptable outcomes.
If you anchor with your target price, you've set the ceiling of the negotiation before it begins. Everything after that point is the supplier working to justify a number close to that ceiling, not working to show you their actual cost and margin structure.
The correct anchoring strategy in supplier negotiations is to let the supplier go first. Their opening quote is their anchor. It will almost certainly be higher than where the deal will end up — but it establishes a range that is typically much more favorable to you than the range established by your target price.
How to Answer the Question Without Answering It
The good news is that declining to share your target price does not have to be awkward or adversarial. There are several ways to redirect the question that are professional, relationship-preserving, and genuinely effective.
The simplest is to reframe the question back: "We evaluate pricing based on market rates and competitive quotes. We'd like to see your best number and work from there."
This response accomplishes several things. It signals that you're comparing their quote to others — which introduces competitive pressure without you having to make a specific claim. It positions you as a sophisticated buyer who knows the market. And it makes clear that you're not going to give them a ceiling to build toward.
Another effective approach is to share a range so wide as to be essentially meaningless to the supplier's pricing calculation: "We're looking for pricing that is competitive for this category and volume. We've seen a wide range in the market and we're evaluating where you fall." That isn't a target price — it's a description of how the market works. The factory can't anchor to it.
What you should never do is give a specific number, even one you believe is conservative. Suppliers are better at reading buyer psychology than most buyers give them credit for. They will correctly intuit that your stated target has been padded, and they will price to what they think your real ceiling is — which is typically a number slightly more aggressive than the one you gave them.
When They Insist
Some factories will push back. They'll tell you that without a target price they can't give you an accurate quote, that they need to know your budget to recommend the right materials, that they're trying to help you by asking.
Some of this is legitimate. Material selection does affect cost, and if you're genuinely open to different specifications at different price points, that's worth discussing — in terms of specifications, not in terms of what you'll pay for them. "We're open to material options that affect cost — can you quote us two versions, one at standard specification and one at a lower cost alternative?" That conversation can happen without you ever naming a target price.
When a factory continues to insist that they cannot quote without a target, treat it as information. It usually means one of two things: either they don't have strong enough cost discipline to quote confidently against a specification, or they are hoping to find out how much they can charge before they decide whether to be competitive. Neither is a factory behavior that benefits you.
The Factory That Quotes First Reveals the Most
When a factory quotes without asking for your target price — when they read your specification and come back with a number based on their own cost structure and margin expectations — they are giving you genuinely valuable information.
Their first quote tells you approximately where their floor is. It tells you what they believe the product is worth at their current cost structure. It tells you what they think a buyer who doesn't know the market would accept. All of that is useful. None of it is available to you if you anchor the conversation with your target first.
The factories that go first with a quote, without fishing for your target price, are also typically the ones with better internal cost discipline. They know what things cost. They know what margin they need. They can commit to a number. That operational confidence tends to predict other things about how they work — their consistency on quality, their reliability on delivery, their responsiveness when something goes wrong.
The Counter-Anchoring Move
Once you have their quote in hand, the most effective response is almost never a counter with a specific number of your own. It's the approach described in our previous article — patience, space, and a request for reconsideration rather than a hard counter.
But if you do counter with a number, counter low. Deliberately, specifically low. Not insulting, but meaningfully below where you expect to end up. You are establishing a new anchor — one that pulls the midpoint of the negotiation toward your floor rather than theirs.
A counter that is only slightly below their quote is a concession dressed up as a negotiation. It tells the supplier that their original number was close enough to acceptable that you barely moved. Counter at a number that requires them to actually move — because the negotiation will likely end somewhere between your counter and their quote, and where that midpoint lands depends entirely on where you start.
What to Do Instead of Sharing Your Target
Before you send an RFQ to any factory, do your own cost-build. Understand the materials, the labor intensity, the packaging, the rough landed cost structure for the product you're sourcing. You don't need to share this with anyone — but having it means you know when a quote is in the range of reasonable and when it isn't. That knowledge is what lets you negotiate with confidence rather than intuition.
When the factory asks for your target price, you don't need one to answer. You need to know whether their number is good or not — and that requires your own homework, not a number you're willing to share with someone whose interest is to price as close to it as possible.
Have you found a way to handle the target price question that works consistently — or has sharing it ever worked in your favor? We'd like to hear what's actually played out in the room.