Haggling with merchants

[cr0ft]

Hi all. Just opened an account with a new merchant (don't worry Ray, its an electrical merchant). Just had my first invoice through and some of the prices are, erm, a bit steep. Particularly on the stuff I will be using all the time like cable, clips, MCBs etc. Do you guys email merchants with a set list of prices you want them to offer if they are going to keep your business or is that just a bit too necky?

 

[Ray Stafford]

Step one, explain that you were surprised how dear they were, and ask the manager to look again at your terms.

Don't give him a target to aim for at this stage - because if you do, you will never get better than that.

Then bank all the good prices, and open a 2nd round of negotiation on the less good ones - this is the time to tell them your target price.

Finally, put a system in at your end which makes damn sure that you check the price on unusual items - the stuff that they won't have discounts set up on. This is the stuff that they will rob you blind on, cancelling out the hard-negotiated gains on the everyday stuff.

 

[cr0ft]

Thanks Ray. My accounts software lets me put in purchase orders & I am seriously thinking about starting to use these. I know you don't do discounting/different terms for different customers but is this worth me setting up? It allows me to put on there what price I am willing to pay for items, i.e. the more unusual stuff. I always feel with these merchants that I am basically handing over my bank account to them otherwise!

 

[Ray Stafford]

Thanks Ray. My accounts software lets me put in purchase orders & I am seriously thinking about starting to use these. I know you don't do discounting/different terms for different customers but is this worth me setting up? It allows me to put on there what price I am willing to pay for items, i.e. the more unusual stuff. I always feel with these merchants that I am basically handing over my bank account to them otherwise!

Its a trade off Keiran - do you incur the relatively small but very frequent cost imposed by running the purchase order system, or take the rarer but heavier cost of being raped by your merchant? It depends on your size, and the profile of work you do, and the degree of rapaciousness of your merchants. Only you can decide...

As a general rule of business, systems should deal with MOST but not ALL potential situations. If you try and set up a system that anticipated every possible circumstance, the cost of covering the last few percent is usually prohibitive because of diminishing returns.

 

[Ermintrude]

P/o brilliant until your in a rush and no one to admin. Use a reference and set terms with merchant that unless the item has a rate against it the sale must not go through. Then when you get lots of randoms through just send email back to your account manager asking them to rectify their mistake.

You have to abide by their t&c so they shall yours.

 

[Ray Stafford]

There are some tricks that you can use with a PO.

For example, we used to have a customer who would ask the price of anything expensive.

So we say "that item is £1640"

He would say - "please deliver - my order number is AB/123/461"

For years, I thought he had a sophisticated ordering system, but actually there was no paper or computer system at all. AB is his initials. 123 was his code for the job, which he kept in his head. 461 is the first three digits of the price we quoted him, but reversed. He used that to check the invoice. Took me ages to tumble that one.