Get supplier/Factory to provide when you need
Negotiate quality and price to get a good deal.
Don’t sacrifice on quality when u bargaining price. In long run quality will succeed.
However don’t make yourself too expensive by defining very high quality levels or on the features which cannot be used even unless you have such a high end customer base for such pricey product or services.
Say A watch is a watch; even it is Rolex of $10,000 or normal watch of $10. Both give same time actually-neither one second more nor less. So how can you improve time-which is purpose and quality of watch while most of watch will be more or less same.
Or a car even though can run on 200km/hour but what is use of making it, if most of city speed limit is 60 or 80 km/hour and in traffic jams you cant hit even 40km/hr. so why increase cost of making it run fast or rather super fast when actually it cannot.
So while you shall not sacrifice on basic needs of product like correct time in watch and desired speed in car but making it too fancy or speedy might not be well worth to invest of.
Focus to reduce your Purchasing Cost
Suppose you buy a product at $100 and then you mark up the selling price by $2 and try to sell it for $102. Some other business owners will mark it up by $2 or $3 or $5 and so on. Some even just $1. That is what most people will do.
All of them are targeting the same groups of potential customers, with the similar range of products and services and thus the most important question arises, how can one stand out and be a winner amongst them?
The author wish to share a big secret in selling, which is: “Selling a product $1 higher is 10 times as difficult as buying it $1 cheaper!”
How about trying to focus on ways to make your products or services cheaper than your competitor? This will surely give the business owners much better results.
So suppose the original price of the product is $100 and if you can spend your time and effort in negotiating for it to be sold to you at $99 instead, then, while maintaining the same profit margin of $2 as your other competitors, you will be able it sell it in the marketplace for $101 instead of the $102 that others are selling it for! You have outsmarted your competitors from other end.
Naturally people will stream towards you s they can get the same product at a lower price from you. So focus less on the selling skills but instead improve your negotiation power to get the cost of acquisition of your products and services lower than your competitors.
Aspire to maintain lower buying costs and also lower operating costs of your business to a level that your competitors cannot reach and this Business model will ensure that you will always be a winner in the marketplace.
From Fact file of Mr. Gupta:
I was always focusing on reducing cost in terms of purchase costs, business overheads and thus was able to sell comparatively lower than my other competitors; thus giving me an advantage to increase my business volumes and turnovers.
At the same time, this allowed me to not to depend on any extra-ordinary selling skills. In fact, I do not have any selling skills. So I do not think that all these years my success has been of any selling skills.
It was all because I purchased my products cheaper, I reduced my overheads and brought them to a level that the price was irresistible to my customers.
Of course, I also identified the right customers and they bought!
I believe you know your products and services better than me but what you may not know is:
1 .It is much easier to get discount when you buy product since as a customer has always an upper edge.
2. In order to get better prices, you can negotiate better price by bargaining for a bigger quantity but split the deliveries into smaller lots. Say instead of buying 1,000 the cost will be much better, if you negotiate the price for 10.000 but split the deliveries into few lots and you can have trial shipment of 1000 first. Of course be real, don’t negotiate a quantity which you can’t do. Don’t forget about fluctuations of exchange rate or demand supply pricing trends when you discuss volume.
3. Whatever contract or purchase order you sign-have a look that you have exit mechanism when they don’t provide you right product or service or can terminate with some notice without any reason even.
4. Define clearly in purchase document your product name, quantity, price, delivery lots and other relevant details. One time a buyer negotiated well a price of computer mouse but ended up getting mouse pad and was selling for months on streets.
5. Most of contracts are very single sided in favor of person who drafts them. They cover the one who prepares it. So get yourself covered well too. Many fine prints can be very detrimental when issue or dispute arises.
6, Always try to have trial period for their services. It is better to date and feel each other rather than getting married and then end up in issues.
7. A lot of time sales people show very rosy picture or sweet talks or promises, but when they are not on paper, after signing them nightmare happens. So while you trust them but don’t over trust them.
8. Don’t keep yourself under illusion of wannabes or freebies as nothing comes free in life.
9. Don’t get lured by good hospitality or gifts of vendor as hospitality may turn out to be very costly.
10. Take note of shipping costs as sometimes that itself can make you winner or looser.
11. In air shipment while you calculate on freight per Kg you may end up paying much higher if the item is calculated based on volumetric weight. Don’t forget local handling cost at shipping as well as destination ports.
12. When shipping by sea, shipping by loose container is much costlier. Upto the extend that it is cheaper to buy full container and ship half empty rather than shipping loose cargo
13 .When shipping by courier like DHL or UPS, use their standard boxes. It can save you almost 20-40% of freight cost- like jumbo junior boxes or their standard box packing.
14. Further if you ship regular, negotiate a good discount and monthly billing with courier companies. You can get upto 50% discounts. While discounts will improve your bottom line, monthly billing will improve your cash flows.
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