Most businesses will rely on other companies to supply them with raw materials, services or components they can use to run their business effectively. In order for a business to be successful, it should minimise its costs as this will help to maximise profits. One way to do this is to negotiate with suppliers to get a better deal. Here are some tips for negotiating with business suppliers.
Don’t accept the first offer
A discussion on price is a healthy part of any business relationship and can save your business lots of money moving forward. Suppliers will have room to negotiate in most situations, and the first price they give you won’t be the lowest price for their goods or services. Never accept the first price that any supplier provides you; it is always worth trying to negotiate. Suppliers will expect the businesses they’re dealing with to negotiate, and as long as you do it respectfully, it shouldn’t cause any issues with your relationship moving forward.
Mention potential repeat business
Suppliers are businesses themselves, and they’ll want to secure more business from you in the future. This might be the promise of working with them again the following year or signing up for an ongoing contract with the supplier. Either way, if you’re going to be working with the same supplier moving forward for a number of months or more than one occasion, you can use this to negotiate a discount. A guarantee of future revenue without any additional costs will be attractive to the supplier and will likely persuade them to drop their prices even further.
Speak to several suppliers
The only way to know if you’re getting a good deal is to speak to several different suppliers that offer the same or similar products and services. You can then compare the costs and use the other supplier’s quote to negotiate a discount. This is a useful tool if you want to work with one particular supplier but you know you can get the items or service cheaper elsewhere. They may reduce their quote to secure your business and stop you from going to another supplier.
Buy in bulk
Some suppliers will automatically offer lower prices to customers who buy in bulk. A prime example of this is the packaging industry. If you purchase a high volume of large gift boxes in the UK from a single supplier, they are more likely to reduce the cost compared to buying a small volume. Still, this automatic reduction of price when you buy more items doesn’t mean you can’t negotiate further. Mention the amount you’re buying in the negotiation process to show them that you’re a significant customer for their business and someone they don’t want to lose.
Use a single supplier
If you can use a single supplier for several products or services, you can negotiate a bigger discount. You, as a customer, may be critical to that business, so keeping you will be a priority for the supplier. Make sure you speak to the supplier and ask about additional discounts if you use them as your only supplier. There is a certain risk associated with using one supplier rather than spreading the business services out over several suppliers. If the supplier can’t deliver, you won’t have anyone else to fall back on as a business. Make sure if you work with a single supplier; you choose one that you can trust.
Use your business reputation
If your business is a household name with a great reputation, you can use this to negotiate a discount. Allow the supplier to feature your business logo and a testimonial on their website; this will help them to gain more exposure and potentially new customers. You can also mention that you’re happy to advertise their business on social media or your website if it makes sense; for a small supplier, this could be highly valuable. Therefore, they’re more likely to give your business a discount because they will use your reputation to gain more customers.
Negotiating with suppliers can be challenging, but using the tips above, you could get a better deal on your business products and services. Always try to negotiate with suppliers; as long as you’re polite and friendly, there should be no issue.
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