Understanding your supplier’s side of the issue is an excellent way to find a good workable solution.
Businesses, for certain, exist to make money. That is their raison d’être. Your supplier may be raising prices to achieve profitability, maintain profitability because their expenses increased or expand profitability.
If she is not making money on the product or service she is selling, a price increase may seem inevitable. There is another aspect of profits, though, and that’s expenses. If you can help her reduce expenses, you might be able to avert a price increases.
Here are few ideas:
- Offer to make larger orders to reduce your supplier’s inventory costs.
- Offer to buy additional products or expand your relationship.
- Lower the supplier’s costs by picking up the product instead of taking delivery or automating the supply chain to reduce your supplier’s overhead.
- If your supplier has excessive inventory of a like product, consider switching products to reduce the inventory costs. He will greatly appreciate converting inventory to cash.
- Set up an automatic recurring orders. For example, suggest a guaranteed monthly purchase. This will help your him manage his inventory (and costs) better.
A savvy business will realize that reduced costs at the same prices, increases profits.
If your he is raising prices to maintain profits due to increased costs, try to find a way to minimize the costs for servicing your account. Again, offer to buy in bulk, pay invoices faster or take some of the costs of order fulfillment out of the equation.
Again, profits = sales – costs.
The last scenario has the most room for negotiation. If you can figure out that she is raising prices to expand profits, use a combination of lowering the her costs (see above) and negotiating a smaller price increase. This is where being a “good client” pays off. Do you settle invoices quickly? Do you make it easy for her to do business with you? Use all of these to your advantage when you are negotiating.
At Kona Impact, we have had many clients over the years work with us to find solid win-win solutions. A client might reduce some of our costs by supplying artwork, using some of our overstock materials or just being a pleasant person to deal with. Clients who cause no billing issues always get special consideration. When a client makes it easy to say “yes” we often do.
Price increases happen for many reasons. Try to see them from the supplier’s point of view and you’ll be able to identify some ways to find win-win solutions.
At Kona Impact, we deal with many suppliers, and, of course, we are a supplier of print, design and marketing services in Kona, Hawaii. We work with businesses all over the world. Our local clients come from Waimea, Waikoloa and Kona, Hawaii. Give us a call at 808-329-6077 to get your business growing as it should!
