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Add $1,000 or More to Your Business's bottom Line in 30 Days!
Ask your existing suppliers for a price reduction
The first, and easiest way to reduce the prices on these items is to ask your current purveyors for a price reduction. This may seem like an awkward thing to have to do, but it's not difficult if you know how. I like to say something like the following:
"Betty, I really like you and value our business relationship, and I'd like to keep doing business with you, but I need your help. This recession has really put a kink into my flow of income, and truthfully, like many businesses, I struggling. I need you to sharpen your pencil on about a dozen products... can you help me out?"
An appeal, as opposed to a demand, along with a subtle inference that you might be considering changing suppliers, will almost always produce positive results. While your purveyors may not cherish the thought of reducing their margin on some of the things they are selling you, they'll probably find that much more palatable than losing you as a customer.
If they are unwilling to budge on prices, this does not mean that you should dump them immediately. Realize that they may be struggling as well. You'll want to make sure you can find an alternate supplier with lower prices before you consider making a change.
Put your product lists out to bid with different purveyors
Whether your existing vendors lower your prices or not, you should also distribute your list of products to all other applicable vendors in your marketplace to see what their prices are. If you find someone who is lower on a significant number of products, switch vendors.
Some coffee business owners have a problem doing this, even though they know their pocketbook would benefit from the switch. They have developed a relationship with their salesperson, and feel as if it would be almost treasonous to switch to another company. I've heard owners say things like: "I could never stop buying from Joe, he's been so good to me!" But, if Joe is over charging you for the majority of the products you are purchasing from him, how exactly has he been so good to you? If you go bankrupt and lose your business, home, and lifesavings, will Joe let you move in with him? It's business, get over it! You probably wouldn't patronize a grocery store that was charging higher prices on the majority of the products they sell, when compared to a competitor across the street (quality being the same). You need to use that same common sense when purchasing products for your business.
A couple words of caution when considering changing purveyors: First, never burn the bridge with a purveyor. Be polite and respectful. Thank them for their past service. After all, at some point in the future, they may be the one with the lowest prices, and you may want to do business with them again. Second, when putting your list out for bids, be aware that some purveyors may low ball prices to win you over, but then plan to methodically raise prices on you shortly there after. Let those who are bidding on your products know that you understand how the price game is played, and ask them to please not do that. Tell them to provide you with prices that they can live with for the next 6 months. Of course you'll understand that their prices might inch up with normal inflation. But, if their prices quickly move from being lowest in the market to some of the highest, they need to understand that you will drop them like a hot potato, and it will be unlikely that you will ever do business with them again. You should be putting all of your products out for bid at least once every 6 months! Remember, every dollar you overspend for something, will require $1.54 or more in additional sales to recover.
There are a couple of exceptions where price may not matter. You want to be careful about changing the brand of products you are using if your current clientele has been built on the unique flavor profiles of those products. You are a coffee business; so changing the coffee you are using to save a buck or two may not be a wise decision. However, if you can find a far better coffee, or one with a flavor profile that is so close to what you are using that it is indiscernible, and it's going to save you money, change! The same applies to your syrups, sauces, smoothie purees, and powdered blended drink bases. Sometimes you might be able to find a better price on these items without changing brands, simply by finding distributors who are more competitive.