The Art of Business: Negotiating with Vendors For Fun and Profit
For many graphic designers, particularly those specializing in print, vendor costs can be a huge chunk of every estimate. And in these days of economic malaise, when clients are paying close attention to the bottom line, your chances of winning or losing a job may hinge on the cost of vendor services to you.
But ask a vendor for a price discount and you’ll get a shrug and a mumble about high operating costs and intense capital investments. Sure, some vendors will offer you a small cut but reserve the deepest discounts for preferred customers.
Even if yours is a tiny enterprise, you can become a preferred customer and knock down vendor charges by utilizing these tips designed to increase your leverage at bargaining time:
Get competitive bids and let vendors know it. Piecing together a request for proposal — and following through by submitting it to several vendors — is a time consuming process, especially if you’ve already found a few vendors who provide great pricing and service. But the exercise can be beneficial in a number of ways. First, it requires you to keep lines of communication open with vendors you may not work with on a regular basis. Vendors you’ve dismissed in the past may have resolved the problems that drove you away or they may have upgraded or expanded their facilities, providing you with new or less expensive ways of solving creative problems. Most importantly, vendors are competitive by nature, and if they truly believe they are competing for each job, they’ll work harder to come up with a better price.
Break down RFPs. It’s much more difficult for a vendor to add in a little extra profit when jobs are broken down incrementally. When you draw up a request for proposal, break it down fairly extensively (or ask the vendor for a breakdown). This will help avoid miscommunication and give you the opportunity to negotiate on a line-by-line basis. If you like Vendor A, but Vendor B is offering a better price on line 18, you’ve just found the leverage to ask Vendor A for a better price.
Negotiate with the right person. You can’t get a discount from a sales rep who doesn’t have the authority to give it. While you don’t want to ruffle feathers, you have the right and responsibility to do so if you truly believe that that person isn’t working in your best interest or has the capacity to negotiate the terms you need. Move up the hierarchy and speak to someone who can meet your needs.
Promote yourself. Introduce yourself to your vendors using the same sales charisma used with your clients. Tout your company and its potential. Let vendors know who you are and why they should consider you important. What’s your specialty? What volume of work can you realistically predict for the vendor’s product or service? What product and services will you be using most? The more vendors know about you, the more likely they’ll be to tighten their beloved margins.
Be professional. If you’re like most graphic designers, you don’t mind putting in a few extra hours, or reducing fees, for dependable clients who are easy to work with. You’ll find vendors more than willing to negotiate price if they know there will be no surprises from you. Creating a professional relationship involves a few of those simple rules learned in kindergarten: Treat people with respect, be slow to accuse or threaten. Look for creative solutions. Be courteous, prompt, and fair. Take the time to review the ground rules with your vendors; Talk about workflow issues, invoicing and payment, and deadlines. Communicate your needs and inquire about theirs. Try to resolve issues before they arrive. And above all, pay your bills on time or early.
Avoid outsourcing. It helps to know the capabilities of your vendor before you ask for a bid. If they’re planning to outsource a significant portion of the work, either find a vendor who can do it all, or split the job up among several vendors. It’s convenient, but rarely cost effective, to have vendors outsource production work, as they regularly mark up fees. Even worse, with every outsourced process, you are that much further away from controlling the quality of the output.
Reserve special requests for special situations. Inevitably you’re going to find yourself faced with the need to ask your vendor for a big favor. Maybe it’s a quick turnaround on a big project or an unbelievable price. Keep the requests to a minimum but don’t be afraid to ask. It helps, naturally, if you are already considered an important client. That’s where all the groundwork comes in. But there’s rarely time to lay groundwork when you’re faced with a major challenge. Your chances of getting what you want will increase greatly if you present your request in win-win terms. “I’ve run my numbers again and again and I can only win this client if we knock down the price. I’ve cut out most of my margin, but if you partner with me on this, I believe we’ll get a lot of future work as a result.”
Ask and thou shall receive. Don’t be afraid to ask for a discount. Sometimes all it takes is a well-worded request: “I can give you a ‘yes’ right now if you’re able to shave off an additional 10 percent.” You can also try the 50-50 approach by offering to split the difference between the vendor’s estimate and what you’re proposing to pay. Provided your expectations are realistic, chances are good you’ll negotiate a price that’s acceptable to both of you.
Every dollar saved at the vendor shop is a dollar in your pocket or a dollar you can shave off an estimate for a client. It’s not always fun to negotiate, but it usually pays off.
This article was last modified on December 14, 2022
This article was first published on February 11, 2002
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