Are You Asking for Discounts from Your Vendors?

By asking for discounts you can improve your bottom line and your profitability. If you don’t ask, you will never secure a discount. There are a number of approaches to asking for discounts, which can set up a win-win for both you and your vendor. Here are a few suggestions:

  • Formulate a “pay early” plan in return for the discount. Your vendor will appreciate you paying quickly and eliminating the need to chase down the money you owe them.
  • Depending upon the goods you purchase from a particular vendor, offer to buy in bulk. Oftentimes, securing large quantities of goods from a vendor provides you the opportunity to secure a discount while providing the vendor the opportunity to free up inventory.
  • For those vendors with which you work on a contract basis, offer a long-term contract in exchange for a discount.
  • If visibility is important to a vendor, you can ask for a discount in return for your promotion of their service or promise to serve as a reference to help them build their business.
  • Create a “preferred vendor” relationship by ensuring you will give them your repeat business.
  • At the very least, just simply ask for a discount.

Whatever method you use, make sure you follow through with your promise.

Below, is an example of how asking for a discount can improve your bottom line.

No Discount 

Revenue                             100

Cost of Goods Sold          <60>

Gross Profit                          40

S G & A                                <30>

Net Operating Income        10

With Discount

Revenue                              100

Cost of Goods Sold           <55>

Gross Profit                           45

S G & A                                <30>

Net Operating Income        15

The end result of asking for a discount: You increase your bottom line by 50%!

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