What strategy shall be used for negotiation with a sole supplier?

As sole suppliers hold strong position the best strategy to base a win-win position with the sharing of info to sole supplier that what business you can provide to him and what your target pricing is for the product that sole supplier is offering.

Since they act as an exclusive agent, they have hold point in terms of pricing and with the best effective negotiation on price discounts when compared to estimated price, a meaningful mark up is considered an allowed considering the size of the value.

1. Capitalize your niche market penetration into your strength for business expansion.

2. Make them believe in repute and acceptability of your brand in the market.

3. Offer them your specialties / expertise  (could be market penetration, distribution channel, marketing and promotion,etc) for mutual business development.

4. Agree a sales turn over and set progressive margin for percentage of sales achieved. For example, 3% additional margin if you achieve 100% agreed sales target, 2% in case of 90% of the target achieved etc.