Negotiating With New Suppliers to Make Money When You Spend Money


Let’s face it, not all suppliers are the same.

Different skills are required to be able to negotiate with different kinds of suppliers and the representatives you’ll communicate with directly.

There’s a certain ‘art’ to negotiating to be able to work with a supplier who’ll willingly want to not only support your business needs but to go that extra mile. You’ll want to make it your mission to convince your supplier to see you as a preferred customer and once you’ve established a good relationship with your suppliers you’ll be in a good position to get support with your private label goals.

Partnering with a supplier really is a big deal. After all you’ll be entering into a business relationship and if you plan on building long-term relationships with your suppliers, then you’ll want to be able to get along and work together.

Of course you DO want to be able to get the best deal and support for your own business although you’ll also want to become a ‘good customer’.

Look at it this way..

If you currently have any customers of your own who you provide products or services to, I’m sure there are some customers in your own business whom you prefer over others.

A few tips to consider when approaching and dealing with new suppliers:

> You DO want to get the best deals for your business although this is part of the ‘art of negotiation’, (you make money when you ‘buy’,) i.e. any savings you’re able to negotiate that are fair to the supplier, will ultimately add more revenue to your bottom line.

Let’s say for example you want to buy 100 units of a $7.00 product.

If you’re able to negotiate just a small 30 cents discount per unit it might not sound like much. When your business scales and you begin ordering and selling more product these small increments can add up to BIG cost savings. Take a look at these examples..

Buy 100 units @ $7 = $700 Buy 100 units @ $6.70 = $670 (that’s only a $30 saving)

When your business begins to scale..

Buy 500 units @ $7 = $3500 Buy 500 units @ $6.70 = $3350 (that’s a $150 saving)

When your business establishes regular and continuous sales for you product.. Buy 1000 units @ $7 = $7000 Buy 1000 units @ $6.70 = $6700 (that’s a $300 saving)

When you build up cash flow from previous sales, you can invest in more inventory to last a longer period of time..

Buy 2000 units x $7 = $14000

Buy 2000 units x $6.70 = $13400

(that’s a $600 saving)

You might be thinking ‘but I’m not currently able to buy 14k worth of stock right now’ and even if you’re not ordering these quantities in one go, If you plan to build and scale your business the right way its certainly not uncommon to need to order 2000 units of one product over the course of a six to twelve month period. (2000 units is actually a small amount when you DO have a good product strategically positioned product in the market).

When you’re sourcing new products remember that you also make money when you ‘buy’ – small discounts will add to your bottom line.

In the example above we negotiated just a small 30 cent discount per unit amounting to a saving of $600/year and if you were to buy just 2000 units per year.

Multiply this saving by 5 products (5 x $600) and you’ve already saved $3500/annum on just the ‘buy’.

Cut 1% to Save $1000’s On Business Services?

Of course you should also negotiate savings on other services like shipping, fulfillment and all the other services your business will need. If the service or product you buy for your business is an ongoing one – it all adds up over time.

Another example of a situation where you would want to negotiate a good deal upfront is using credit card processing merchants – if you eventually sell in any kind of volume, a small 1% discount per transaction can amount to thousands of extra dollars in your pocket over the year.

Of course you’ll make money when you sell your private label products by ‘adding value’ although you’ll want to setup your physical product business to be as profitable as it can possibly be –this is why negotiating the best deal when you buy stock is something you should strive to perfect.

On the other hand.. should also be a good customer to your supplier. If you try to cut your suppliers profits too much then the incentive to supply you won’t be as appealing

I always try to negotiate but I also like to be ‘fair’ with my suppliers to build a good relationship. Business can change fast and if you have good relationships in your industry you’ll be well placed to call upon and leverage your supplier friendships to help you adapt to those changes.

The 5 Most Important ‘TO DO’s’ When Dealing with New


>    You DO want to convince your suppliers that you’re a good customer and potentially a ‘high value’ customer

>    You DO want your suppliers to know that you have a solid plan of where your business is heading

>    You DO want to show your suppliers that you know what you’re doing and talking about

>    You DO want to convince your suppliers that you’re not a ‘one trick pony’ and that you’re reliable, consistent and around for the longer term.

>    You DO want your payments to arrive on time and as agreed (–although please always research your suppliers business and be cautious of sending payments to new suppliers–)

These a just a few tips for helping you secure the deal and to save money at the pint of purchasing your private label product inventory.


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