Chef in restaurant kitchen on the phone making an order from supplier and smiling
Suanny Garcia
By: sgarcia
Read in 11 minutes

How to Negotiate with Your Suppliers

Negotiating with your suppliers will not only make your life easier, it will allow your business to grow exponentially. Don’t just be a price taker when negotiating with your suppliers. By following these simple tips to negotiate with your suppliers, you’ll reduce your production costs and see an increase in your profits.

Now, let’s get to the nitty-gritty on negotiating with suppliers.

First off, as a business owner, it’s imperative you control all costs in all stages of production: labor, sales, to name a few. And many would argue that supplier costs are top of the list. You can easily reduce your costs while still maintaining your selling prices — but not sacrificing quality. Getting the best prices from your suppliers is crucial: the production process of your business starts from the raw material, therefore keeping your costs low during the initial stage allows you to be more flexible in other areas.

Negotiating the right deal with your suppliers can take many forms: it does not have to necessarily be exclusively related to price. The negotiation process can affect other factors such as delivery times, payment terms or the quality of the goods.

Dealing with suppliers puts your negotiation skills to the test, but we are here to help you. Below are tips for first-time negotiators as well as tricks for more seasoned professionals. And remember, negotiating does not end once you’ve selected a supplier. There’s always an opportunity to renegotiate and evaluate your costs.  


10 Tips to Negotiate with Your Vendors and Suppliers

1. Think like a supplier

The first step in negotiating is to think like your counterpart. A supplier wants to earn your business, they want to make you happy while being able to provide for their own company, so don’t lowball them to a point they don’t want to do business with you. Gauge where they’re flexibility lies. Is it in their delivery? Is it in the monthly fee? What about down payment? Any discount for purchasing in bulk? Thinking about the supplier’s needs as if they were your own helps you better negotiate. What would you like to hear if you were the supplier?

2. Know your supply, produce or raw material costs

When you’re negotiating, know what it costs your supplier to get their supply. This might be a more research-intensive detail or fact, but it helps to know what it cost the guy on the other side of the table to make what he’s selling. By figuring out the cost to make the product, you then have a much better idea of how much wiggle room you have when negotiating.

3. Find the best supplier, then find two others

This goes without saying but always do your research on supply. Before signing a contract with a supplier, make sure you’ve at least seen three others or more. Having a better perspective on varying rates allows you to better gauge prices and quality of product comparatively. And you can always mention to supplier A that supplier B is offering you more product for a better price. This gives you a healthy competitive leverage and usually helps during the negotiation process.

4. Be in it for the long-term

Negotiate longer-term contracts. In the long run, this ends up saving you money because suppliers know you’ll stick around for a while and are willing to be more flexible with their price. Say a supplier’s minimum is a 6-month contract for $3,000. Well, negotiate a 12-month contract for $5,000 — the supplier doesn’t lose much, and you end up saving yourself more than a thousand yearly.

5. Express your loyalty to one supplier

Does your supplier provide seasonal products, plus quality kitchenware, plus the best napkins in the market? Then, offer to seal the deal and purchase more than one product with them. Buying in bulk is always a good idea and normally means lower fees. Whether you’re in the restaurant business or you’re looking to stock up on gardening and plants for landscaping, keeping true to one supplier might just be the way to go to lower your costs. If you can’t buy in bulk or buy several items from the same supplier, partner up with a trustworthy business in your area who needs these supplies and both your business and your partner will get the better deal.

6. Look for the new kid on the block

Oftentimes, suppliers that haven’t been around for too long are more eager to earn your business, which might mean they have lower fees for the same high-quality product that the supplier who has been around for 20+ years is selling. If you opt to give your business to a new supplier, be sure to read reviews and testimonials beforehand, but usually it can turn out to be the best bet for a good deal.

7. Extra, extra! Buy surplus

A technique used by renowned brands like Marshalls, Ross and TJ Maxx, buying surplus means offering your customer the best quality for a more affordable price than they would normally get. As long as it does not affect the quality of your product, buying surplus can be a great option to cut costs while still being able to sell items at your target price.

8. Buy & support local

Buying local is not only a great strategy for supporting local economies, but it’s also a selling point for your business. Particularly in the restaurant industry, diners love to hear the produced is locally-sourced. For them, it usually means produce is fresh and more than likely organic. Plus, who doesn’t love to support local farmers? Depending on where you’re located, buying local can save you big bucks so long as you purchase in bulk and you’re purchasing in season. You’re especially in luck if you live in a state where the soil is fertile year-round.

9.  Pick the best

Nothing compares to high-quality product. When it comes to negotiating, give it a go, but if you find no comparison to the product you think is the best, go for that product at whatever the price may be (of course, as long as it’s within your budget or a slight stretch). Your clients will know the difference and they’ll pick you out of the bunch, which means happy clients, prospering business!

10. When all else fails, DIY

There’s nothing clients love more than hearing their cilantro is freshly picked from the herb garden, their tortillas are freshly made in the house or that the sunflowers they are purchasing for mom grow only a few steps away in a sunflower field. It’s more cost-effective to grow things in-house whenever possible, but it can also be a great marketing sell: i.e. pick your own sunflowers outdoor at the new flower shop in town — a sell and an experience all at once!

Remember, if you get really nervous or anxious about the idea of negotiating, which is completely normal, be sure to grab a friend and start rehearsing. Having an idea of what you’re going to say during that day will help prepare you for whenever the time will come.

So now you’re fully equipped with all the know-hows of negotiating with suppliers. BUT, what if you already have all the supply you need or if you’ve already negotiated seemingly the best price for a product? Negotiating with your suppliers is something you shouldn’t only do the first time you acquire a new material or ingredient. Ask yourself: when is the last time you renegotiated pricing with your current suppliers? Then, take the extra step to double check current prices on the market. Are you paying way too much for your supply? Has the demand decreased? Can you get a better deal elsewhere when your contract expires? Do the research.

By following these simple tips, you’ll get better prices and terms in your supplies and materials.  It’s one of the best ways to decrease your expenses so you can realize more profit in your business. Next time you pick up the phone to call your supplier, arm yourself with the best attitude and make sure to have this list handy. We guarantee you’ll see the difference right away.

Want to know other areas in your business you could improve? Are you unsure what steps to take to transform your business? Be sure to take the simple growth evaluation quiz that we created just for you. It’s free, it will only take a few minutes of your time and you don’t need any additional documents to complete it. In less than 72 hours you will receive a report with everything you need to know to start transforming your business.

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