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.
Cost of Goods Sold <60>
Gross Profit 40
S G & A <30>
Net Operating Income 10
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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