negotiating with suppliers

Mark Rogers

CGF, Certified Grumble Framer
Dec 22, 2003
Dallas, TX
I had assumed that the archives would have info about how negotiating prices and terms with suppliers. Surprisingly, I could only find info about lease negotiations. Anyone have any tips on this?

I guess, if you're in a bargaining position by virtue of your purchasing volume and timely payment history, you'd tell them what you want and they'd either say 'yes' or 'no.'

There is a thread on this forum with a perfect example of supplier negotiations gone bad - just for comparison.
Anytime you feel you are in a position to ask for a better price, terms, etc., call me. There is no downside to asking. We always try to give a great package price for new shops and shops that are expanding. Good luck.
Peter Ackerman
Mark: Ron and Peter are right. All you have to do is ask. If your purchases don't earn you the price points you need, most suppliers will tell you what it takes to get to the price you need.

Go for it!
Maybe it would be useful to list some of the types of concessions and perks suppliers will sometimes offer. I'm sure there are others I've never heard of, but I am a very small player.

Free UPS or other shipping, for example, with five chops. Sometimes this is listed, and sometimes you have to ask.

Better price breaks. For example, 10-case pricing with 5 cases of glass or 5-case pricing with a single case of fomeboard.

Better pricing if you commit to a certain minimal purchase volume each month.

Free corner samples.

Longer payment terms on major equipment purchases, and/or shipping allowance.

Substantial price breaks with exclusivity. For example, if you show only one mat line or one metal moulding line. (This one makes me nervous.)

When I was still selling photo supplies, it was common for vendors, like Kodak, to offer coop dollars to help pay for advertising if it included a logo or a mention of their products. I've never heard of this in our industry, perhaps because we don't have the brand recognition that Kodak and Fuji enjoy.

It's unclear whether you are a brand-new business owner or an old pro looking to cut some costs, so I apologize if this is all old news.
If there's a single-most-important key to getting what we want from suppliers, it has to be payment history.

We can ask for anything, friends. But the cooperation we actually get will depend on the supplier's confidence in our ability & willingness to pay the bills on time.

Our suppliers, including the manufacturers, are distributors. That is, they have to maintain inventories to serve us. Theirs is a capital-intensive business, not like our labor-intensive frame shops.

The value they offer is TIME AND PLACE value. Timely cash flow is absolutely necessary to their profitability. They live & die by the way they handle Accounts Receivable.

Rule #1: Pay your bills on time. And if there's a cash discount offered, earn it by paying early whenever you can.
Every successful negotiation starts with the premise that both sides need to see benefit.

The fact that you would like lower pricing benefits you, but how does that benefit the other side?

So, approach it from the other side's point of view. As in, how will they benefit from lowering their prices?

If you indicate it will be in increased volume, that's a start. But how much extra volume is worth extra discount. Most catalogs show the built-in discount factors, but to exceed theose levels, you have to exceed their expectation.

Perhaps a simple question like "What do I need to do to get better pricing" is a good place to start. They will open the negotiations at that level and you respond accordingly.

But, to exceed their expectations (or to cure a deficiency at your level) look for things that will make your account more attractive. It might be as simple as consolidating orders to weekly instead of several times a week or faxing orders instead of verbal placement.

Every negotiation has a brick wall-the key is to get as close to the wall as possible. And everybody has a different brick wall