5 Tips for Negotiating with Suppliers

One of the easiest ways to make more money is by lowering your costs. It seems simple right?

In my experience, most people focus on the top line. They think, if I want to have a higher profit, I need to make more money or revenue. That’s true, but it can be just as effective to lower your costs for the item or service that you sell.

For CZ invitations, our largest cost of sales is our material. These are the top five lessons we’ve learned from successfully negotiating with our suppliers.

Don’t be afraid to ask

Picking up the phone and asking to speak with someone about a discount can be scary. Just remember the worst thing that can happen is that nothing changes. It’s not like your supplier is going to increase your pricing because you asked for a discount.

I would also encourage you to be creative in your ask. If pricing on the materials is firm, maybe you could ask for reduced shipping costs or even priority shipping for the same price. Another option is asking if they offer quantity discounts. Ordering your materials in bulk may be a cheaper option.

This was a big hurdle in the beginning that Carley and I had to get over. It’s awkward to start the conversation, but our largest supplier was receptive to the idea. They wanted our business going forward, and were willing to meet us halfway with a discount.

Use any leverage that you have

You are the reason the supplier exists. If you are spending a lot of money with them, then you are a BIG reason why they exist, and they will take you seriously. Be firm, but handle the conversation with tact. You are trying to add another layer to your supplier relationship. You don’t have to be rude to accomplish your goal.

Also, remember to come prepared to the negotiation. Most likely, this supplier has no idea how much you’re spending! Let them know what you have spent with them in the past six months or year. You could even share your projections for what you plan to order in the next few months as well.

When Carley had a real conversation with her #1 supplier, they informed her she was their biggest client. That’s huge. At my day job company, we nearly always bend over backward to meet the needs and requests of our top customers. It turns out other companies do too!

If at first you don’t succeed, ask for their manager

The first line of defense is usually trained to say, “we don’t offer discounts” or “we can offer you a 5% discount on your next order”. Take your request to the next level if you are not getting your desired result. Getting a consistent discount on your supplies goes straight to your pocket!

Carley ended up speaking with the owner of the company and negotiating directly with him. Her day to day support tech didn’t have the authority to sign off on any discounts. This was also when she realized how important her business was to the supplier. If the owner takes time to speak with you, you know that you are important.

Be persistent; the first negotiation is just the beginning

You’ve spoken with everyone at the company who will listen, and they are not interested in giving you a discount today. That’s okay; the economy changes every day! Just because your supplier was enjoying the good times a few months ago, doesn’t mean they are in the same position today. It is always worth it to reach back out. Even if they gave you a discount, there might be a deeper discount available down the road.

Carley has gone back to the negotiating table a few times over the years. She has a good relationship with the employees, and when she asks for a discount, it is easily justified for both parties. Sometimes she doesn’t get the entirety of her ask, but they usually offer her something. Down the road, she will go back again and continue the negotiation. You should feel comfortable restarting the discount conversation, especially if you are ordering more and more from the same company.

Build a relationship

This is the most important of the tips. Get to know your supplier. Be friendly and genuine when you speak with them. You are investing in their product, take it a step further, and invest in the people who work for your chosen supplier. People are more receptive to requests when it comes from someone they like.

Carley speaks with the same front line customer support person just about every day. This benefits CZ Invitations a few ways, but mainly it allows her to get what she needs, when she needs it, for a good price. That’s the dream scenario with a supplier. Sure, she has weeks where they mess up orders, but with the relationship already in place, they are quick to resolve the problem.

Now you are now ready to be an expert negotiator, congratulations! My advice would be to start with the supplier that costs you the most and work your way down. Any discount will go straight to the bottom line a.k.a. your pocket!

Remember, people like to help people they like. So, be friendly! It will pay off.

Nathan Zuercher