Weiss Advice Issue: 164, May, 2017
I’ve written millions of words on why you should never negotiate fee with a client. But what about the other side: Is there a way for you to lower your costs by negotiating fees with suppliers?
I think there are several ways, and the more successful you are in lowering your costs, the more money you get to keep. Simple as that.
The next time you are purchasing web services, design work, supplies, sub-contracting help, office equipment, and the like, consider one or more of these tactics:
- Is there a discount for cash? Many providers will readily grant a discount if they don’t have to pay credit card charges.
- Is there a discount if you pay at the front end? Service providers from lawn care companies to insurance firms will often exchange a lower price in return for use of the money.
- What about volume discounts? If you guarantee a minimum purchase over a finite period of time, will there be a quid pro quo?
- Will they match the competition? If you point out that a web site or another retailer has a lower price, will they match it to obtain your business on the spot?
The rule here is that you don’t get if you don’t ask. If you don’t believe that, just ask at the hotel desk if you can be assured you’re getting the lowest possible rate, or whether you can get an upgrade without increasing the rate. My experience is that you can obtain one or the other at least half the time if you ask, but it will be offered less than 10% of the time if you don’t ask.
You don’t have to be aggressive, threatening, or rude. Simply try these types of questions:
- We’ve been doing business for along time, and I’m wondering if we might discuss whether I’m getting the best rates that you offer?
- I know I’m a good customer, and I’m interested in whether I’m getting the very best price for the very best customers you have. If not, why not?
- I’m considering moving all of my business here and opening a house account. What type of benefits might I expect?
- I’ve found that I’m being solicited by competitors offering far lower fees. I’d like to stay loyal to you, but I also have to be responsible to my family. What can we work out?
Note that you don’t want to cite a price or a deal. Let the other party come up with the numbers. They may well offer more than you expect, but if they don’t you can always negotiate further. However, if you cite a number, you’re stuck with it as your best condition, and the other party will then attempt to compromise based on that price.
Some other techniques:
- Spread your work around and, when one supplier inquires about how to get a larger share, ask for a comprehensive deal.
- Check with others who have used the service or purchased the product to learn what they have paid.
- Explore the advantages of doing it yourself, IF it’s not too time-consuming. (Doing your own books is a lousy idea, pay the bookkeeper; but writing your own letters and answering your own phone can save a lot of money in part-time, shared, or even full-time administrative help.)
- Don’t let people “nickel and dime” you. The lawyers have an infuriating habit of charging $4,042.50, the last $42.50 being for copying or postage. That’s absurd. If you provide a printer with thousands of dollars of work, that shop shouldn’t be charging you a nickel a copy when you need duplication.
Of course, if you work in the small business market as a consultant, never do this with a client or that person will turn the tables immediately!