Once a business establishes a relationship with a supplier, the business owner does not usually go back and review the original agreement to see if they are still getting the best deal with them. Negotiating with a supplier is a good way to decrease expenses, which in turn, increases your profit margins. Negotiating with suppliers is a continuous process, and as your business grows, you will need to do it multiple times.
Many business owners do not know how to negotiate competitive deals with their suppliers and leave it up to the suppliers to dictate terms. Below, we will look at how you can better position yourself to negotiate great deals with your suppliers.
When negotiating, you want to always have the upper hand. The best way to do this is to have a thorough understanding of the party on the other side of the table. A good place to start is finding out how valuable your business is to your suppliers. Your bargaining power is directly related to how important your business is to the supplier.
Also, checking whether they have any competitors or are new to the market can give you an upper hand in any negotiations. If your suppliers do not have a lot of customers or if you are their main customer, try not to push things too far. You might want a competitive deal, but you should not do this while eroding any goodwill that exists between you and these suppliers.
Sometimes the best way to get a good deal is to let different suppliers fight for your business. To encourage competitive pricing, you should talk to several suppliers and let each of them know you are shopping around and will give your business to the supplier who gives you the best terms.
Remember that this strategy works best if you have a sizable business. In addition, the suppliers you contact should offer high-quality products.
In most cases, a supplier will add rebates to the deal as a way to make it work for both of you. Many business owners leave this up to the supplier and do not counter offer. To make the deal work better for you, have the rebate estimates in front of you. This way, you can provide data that helps shore up your negotiation. Using a rebate management solution such as e-bate, you will be able to negotiate better deals, as you will have the numbers right in front of you. E-bate is a rebate management solution that helps you manage complex rebate programs, thereby helping you save money, increase revenue, and eliminate the risk often associated with negotiating contracts.
Suppliers are likely to give you a better deal if they know you are considering transferring all your business to them. At a bare minimum, doing this is likely to land you better pricing as well as deeper discounts and rebates.
Before giving one supplier all your business, it would be best to get in touch first to let them know you will be doing this. Next, ask them what they are willing to offer to get all your business. Once you know what they are willing to offer, you can start countering and negotiating a better deal.
If you want better deals from your suppliers, you have to negotiate. Remember to be assertive in your position, but not too pushy as to aggravate the suppliers you still need to do business with.