Today we’ll look into how you can lower your price through other means than through negotiation. Don’t be surprised if these methods reduce your current purchasing price with as much as 25%.
1) Buy larger quantities
This one might seem fairly obvious – buy more and you’ll get a lower unit price. However, many importers tend to buy from more suppliers than necessary – and thus lower the quantity purchased from each one of them.
Orders can easily be concentrated on a smaller amount of suppliers if you base your product selection on what the suppliers has to offer, rather than selecting a number of suppliers on a predetermined product list.
2) Streamlined usage of Materials & Components
A product is a composition of materials and components. Your supplier needs to purchase these materials and components from their subcontractors. A large number of various components and materials results in a higher amount of purchases that needs to be made, and thus higher costs.
The best way to avoid this issue is simply to reuse the same materials and components in several products. A positive side effect of this approach is that you might also be able to lower the suppliers Minimum Order Quantity (MOQ) requirement.
3) Avoid unnecessary product customization
Customized products often require customized tooling, such as injection moulds. While an injection mould can be used for a very large number of units (often counted in the hundreds of thousands) it’s in general paid for by the importer. Thus the more customized products you order, the higher the tooling cost will be. If you’re specifically importing unique products that has no equivalent on the market, then you can stop reading.
However, plenty of importers fail to understand that even the slightest change in a design may lead to dramatically increased tooling costs. I list my suggestions below:
The importer is usually expected to pay for any additional tooling. Avoid product customization unless it’s essential
Limit the product customization to components and/or materials that doesn’t require expensive tooling
4) Lower your quality requirements
I’ve seen plenty of situations where the importer requires a quality standard that simply cannot be matched by the supplier. This could be dimensional tolerances that are too narrow or other product specifications that are all but impossible for the supplier to comply with.
From the supplier’s perspective, quality requirements that are very hard to reach increases the waste and the risk of a total loss. The end result is that the supplier is forced to raise the price in order to compensate for the increase waste and risk. If a supplier clearly communicates that your requirements are hard or impossible to reach, you should do any of the following:
Look for another supplier
- Accept a price increase
- Adjust your requirements according to the supplier capability
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