What if you just received an email advising you that your costs are being increased on one of your best-selling items? You might sit back in your chair and think, “wow, we were just starting to make real profit there.” But not wanting to rock the boat, you shrug it off, update your files and start drafting the memo to affected personnel. Your mind is focused on thinking of other ways to save money.
1, 2, 3, Stop! You have options and most suppliers will take the time to hear your side of the story. Here are a few negotiation tactics that will serve you well for today’s example and others that pop up in the future.
Tip #1 – Get the Facts
Before you attempt to negotiate with the supplier, pull together all of your historical data. It will be beneficial to know how many sales you had or how much inventory you used over the course of the last six to twelve months. When you can identify your past and current sales trends by month, you have critical information to support your position.
Tip #2 – Look at Other Suppliers
Get at least two other comparable quotes so that you can see if arguing your case is worth the effort. Perhaps you were getting the deal of the century, but did not realize it. Nevertheless be prepared to speak to what the competition is offering you.
Tip #3 – Price is Not Everything
As I mentioned in my “Understanding your COGS” blog last week, there are other ways to trim your “cost of goods.” A few areas where you can easily negotiate include: use different raw materials, buy higher volumes or accept longer delivery times. Know your bottom and top prices and work from there.
Tip #4 – Know What Your Supplier Needs
Most suppliers are not just going to give you up as a customer, especially if you have a long tenure with them and have a good paying history. Don’t be afraid to just ask the question, “Why are you raising my prices?” If the supplier is raising pricing because volumes have dropped, negotiate a rebate program if you can meet or exceed their volume demands. If they need to hire extra labor to meet your production dates, look at expanding your delivery times during non-peak times in your business.
Tip #5 – Barter Your Way to a Win
Do you remember the old fashioned way of bartering? You might be surprised at how well this technique still works in today’s business world. Offer to run a special targeted sale of the supplier’s product in exchange for discounted rates for a set period of time. Ask if they will share in advertising costs to promote the product in another marketing channel.
My best advice? Don’t give up so easily, and just ask for what you want.
If you get the opportunity to take a negotiating class, please do so. It is well worth the cost, and will pay for itself over and over in both your business and personal endeavors.
I highly recommend Karrass Effective Negotiating® seminars and their motto says it all:
“In Business as in Life – You Don’t Get What You Deserve You Get What You Negotiate”
Thanks for reading my blog today.
I would love to hear your feedback and your negotiation stories! You may reach out to me at [email protected].
Cindy Berrier is our Customer Service/Operations Manager at 123Print.