When it comes to improving profits and boosting the bottom line, many business owners assume that they have to attract more customers or sell more to the customers they already have. It’s all too easy to overlook the potential for improved margins that comes with reducing the price you pay to suppliers for their products or services.
In fact, many startup businesses, particularly retailers, don’t even think about asking for better prices or discounts, and simply assume that the list price quoted by the supplier is the price that everyone is paying.
Whether you have just launched your business or you’ve been trading for years, it’s always worth negotiating for a better deal with suppliers. With a little advance planning, business owners can put themselves in the best possible position to secure a worthwhile discount from their suppliers.
As every penny shaved from supplier costs goes straight to the bottom line, it makes sense to do your homework and follow these simple tips.
Ask for what you want
If you don’t ask the question, then the answer will always be no. It surprises many business owners who pluck up the courage to ask their suppliers for a discount, just how willing suppliers are to negotiate, in order to retain custom and build a long-term relationship.
Planning is central to getting a good deal. It’s important to know what it is you want from your supplier, and to consider what their likely response will be, so that you are ready with a counter-offer. Negotiations should be reasonable, and should take into account the supplier’s costs and their need to also make a profit.
If you’ve built up a solid trading history with the supplier, and you always pay your bills on time, you’re likely to have a much better chance of securing a discount on prices. Likewise, if you can present a realistic plan for how you intend to drive volume sales of the supplier’s products, that may help convince them to look favourably on your request for better prices.
Of course, the end goal when negotiating with suppliers is always to secure lower prices. However, if the supplier will not budge, there are other avenues to explore. Try asking for a discount for volume orders, or for taking every item in a product range.
Consider asking for a discount that is based on quarterly sales volumes, or for a loyalty discount. Even something as simple as extended payment terms or free delivery can really add up, so keep those ideas in mind if you aren’t able to secure a cash discount.
Signing up for your supplier’s newsletter and asking for priority notification of supplier promotions and special deals is also a good idea. It sends the message that you are receptive and determined to build a mutually-beneficial relationship with your suppliers.
However, don’t fall into the trap of buying products you don’t need, or that don’t fit within your business, just because they’re offered to you at an amazing price.
With a little forward thinking, and a clear strategy, it’s easy to pitch a confident request for better prices. Understand your own value to your suppliers, and build a case to show what you are offering in return for a discount, and you should soon find yourself enjoying better prices across the board.