How can I get a better deal from my supplier?
I think I should be getting a better deal from a supplier but they insist there’s no room for negotiation. They’ve never let me down and are good at responding to last minute requests, but I know I can get the same products cheaper elsewhere. What should I do?
A. David Pollock of Chess writes:
The adage, ‘you pay peanuts, you get monkeys’, is largely, though not always, true. What you have to ask yourself is: is my current deal with my supplier mainly based on price or on quality of service?
Your agreements with suppliers are usually a balance between the two and if the relationship is working, I would suggest that you don’t break it.
Do not move on price alone, you need to factor in the cost to your business for choosing a cheaper, poor-quality service. This can be a serious mistake with wide-ranging ramifications. You can still negotiate hard with a good supplier, and make them aware of the rates available in the market place. However, if they take a strong position it is usually because they offer a premium, quality service.
It sounds as if your supplier is prepared to lose you as a customer rather than reduce their rates. They probably view lowering their rates as tantamount to reducing their service levels to you. This should act as a warning sign. A good company will be prepared to lose you rather than compromise on their price and then ultimately their level of service.
When you sit down and work out the differentials, how much are you talking about in real terms? Is it worth paying that little bit extra for a service you can rely upon? Don’t forget, the price differential is also made up of your time and your staff’s time taken up in dealing with poor delivery, reliability and service levels – this should not be underestimated.
We at Chess find customers occasionally leave so they can get a ‘better deal’. However, it is surprising how many of them soon return when they realise the grass isn’t always greener.
I would question the level of service you could expect from the proposed new suppliers: many talk the talk, but do they walk the walk? A quality, reliable service is equally as important as a good price. Ask yourself the questions posed here and then make that move. Sometimes you really do get what you pay for.