You’ve asked nicely. You’ve threatened. You’ve tried to persuade. Yet your suppliers, for one reason or another, still refuse to provide discounts.
In this article, we explore seven ways to convince suppliers to help you reduce costs, followed by one guaranteed way to win a substantial discount. (Pressed for time? Scroll down to the end to find out how.)
But first…
Why Do Suppliers Refuse to Provide Discounts?
Good question! Suppliers refuse to provide discounts for many various reasons. Maybe they’re facing their own rising costs, or perhaps they believe their product is worth every penny. Often, there’s a power imbalance at play. If you’re dealing with a large supplier, they might simply not care if you take your business elsewhere. After all, you’re just one customer in a sea of many.
And sometimes, it’s simply a matter of principle. After all, they've got a business to run too!
Seven Ways to Win a Discount From Suppliers
1. Build a Relationship
Suppliers love to feel appreciated. Think about how you can make them feel like you’re not just another number on their spreadsheet. A good rapport can go a long way. Who knows? They might just give you that discount because you’re a preferred customer – a status that becomes super important when demand outstrips supply.
Example: A small café owner regularly visits their coffee bean supplier, engaging in friendly conversations and showing appreciation for their products. Over time, this rapport leads the supplier to offer a special discount on bulk orders, recognizing the café as a valued customer.
2. Leverage Competition
If you’ve got alternatives, don’t be shy about mentioning them! A hint that you’re considering other suppliers might encourage them to sweeten the deal, unless they consider you too small a customer to bother with.
Example: A retail store owner mentions to their supplier that they have received competitive quotes from other vendors. This prompts the supplier to offer a discount to retain the business, knowing that the owner has viable alternatives.
3. Timing is Everything
Catch your supplier at the right moment! End of the month? The quarter? When they’re trying to meet sales targets? That’s your golden hour. Suppliers are more likely to offer discounts when they’re in a pinch, so keep an eye on market conditions.
Example: A construction company approaches their supplier for materials at the end of the quarter when the supplier is trying to meet sales goals. Recognizing the urgency, the supplier agrees to a discount to close the deal quickly.
4. Bundle Up!
Look for opportunities to centralize and combine, then buy in bulk! If you can increase your order size or combine multiple services, you might just find that discount falling into your lap. It’s a win-win: you save money, and they move more inventory.
A word of warning: Depending on the size and shape of your business, this approach will only take you so far. If you’re a large coffee chain with hundreds of stores in every state, you’re in a brilliant position to consolidate purchasing and bulk up. But if you’re a small business you’ll need to think bigger (see below).
Example: A hotel chain decides to consolidate its orders for linens, toiletries, and cleaning supplies from multiple suppliers into one larger purchase. By increasing the order size, they negotiate a significant discount for the bundled services.
5. Negotiate Terms, Not Just Price
Sometimes, it’s not all about the price. Talk about payment terms, delivery schedules, or loyalty perks. Maybe you can offer to pay for their product with goods and services of your own? A little flexibility can often lead to concessions that feel just as good as a discount.
Example: A tech startup negotiates with their software vendor to extend payment terms from 30 days to 60 days in exchange for a modest discount on the total contract price. This flexibility benefits both parties.
6. Showcase Your Loyalty
If you’ve been a loyal customer, make sure they know it. Remind them of your history and how much business you bring their way. It’s hard to ignore a loyal customer asking for a break. And by the way – every supplier knows that a good customer testimonial is worth its weight in gold.
Example: A long-time customer of a printing company highlights their consistent business over the years when requesting a discount. The supplier, recognizing the customer’s loyalty, offers a price reduction to maintain the relationship.
7. Get Innovative
Got an idea that could help your supplier out? The best sort of innovation in procurement involves finding ways to work with suppliers that cuts the cost of doing business.
Example: A marketing agency proposes to co-host a workshop with their supplier to promote both businesses. In exchange for the partnership, the supplier agrees to provide materials at a discounted rate, seeing the benefit in increased exposure.
The Guaranteed Solution for Winning Bigger Discounts
The golden ticket to substantial discounts lies in joining a Group Purchasing Organization (GPO).
If you have meaningful indirect spend in the tens of thousands of dollars, using a GPO will give you access to average savings of up to 22% through the power of group purchasing. Una leverages over $100 billion in buying power with a portfolio of over 2,000 supplier contracts that are always free to use.
With a GPO, you’re not just another small customer begging for a discount. You become part of a powerful pack with massive leverage in the form of collective buying power. So, if you’re tired of the endless back-and-forth with your suppliers, consider joining a GPO. You’ll save time, money, effort and maybe even your sanity!
Ready to get started? Contact the Una team today to learn more.
