As a small business product seller, it’s key to the profitability of your business to be able to get the best deals possible from your suppliers. Lower costs from your vendors mean a higher profit margin for your business, and a slightly better profit margin may make all the difference in the world on how well your business performs. Try to negotiate whatever cost savings you can rather than just paying the list price without asking any questions. Here are some key tips to help you negotiate better deals with suppliers.
Establish a Relationship
You don’t want your company to be just a name without a face to your suppliers. Take the time to meet them and talk with them in person. Ask some questions about their business, and about how your business might be able to help them, such as in terms of getting their products into new markets. The important thing is to develop a personal relationship since it’s a lot easier to negotiate a deal or ask a favor from someone you know personally than from someone who only knows your company’s name. You may not be able to get a great deal right away, but over time, having a relationship should open the door to secure you some price breaks.
Know Your Suppliers’ Costs
Information is an asset in any business negotiation. Research as best you can your suppliers’ actual costs. This gives you a clear indication of how much room they have to work with on price. There’s no point in asking if you can get a product for $2 if you know your supplier’s cost for the item is $2.25, but if the quoted price to you is $6, then you know it has at least a modest amount of room to give you a discount and still turn a decent profit.
Reduce Risk for the Supplier
One factor that may help you negotiate a better deal is thinking in terms of what benefits your own business, and then offering that kind of benefit to your supplier. One thing that makes any business more financially secure is having guaranteed revenues. You can offer to provide that kind of income security to your supplier by signing a long-term contract to buy a designated amount of supplies each month. In return for the guarantee of not only having your business, but having it at a certain level, your supplier may be willing to offer you a discount on price.
Think of Creative Ways to Get Discounts
There are other ways to reduce your costs besides getting an upfront price discount. You may be able to secure significant cost savings by coming up with some creative negotiating offers. For example, if you can’t get a direct discount on the cost of an item, see if you can get the supplier to agree to free or discounted shipping costs. You might be able to get a discount by ordering more items at one time, less frequently. If you can easily shift from ordering 100 items monthly to ordering 300 quarterly, that may get you a substantial enough discount to justify making the necessary adjustments to your ordering schedule. Most suppliers are open to offering some kind of deal to any business they can count on as a loyal customer to help them move their products. Do your homework, and then approach your suppliers to see how you can best secure some discounts and cost savings.