Last week’s post highlighted a few common errors made when pricing for retail. This week the focus turns to how optimise profitability by negotiating smarter. Many wholesalers and manufacturers will have different types of discounts – not all of which are widely communicated. Often it is a case of ‘don’t give if they don’t ask’. Why would a rep give away something if it is not important enough for you to ask for it? Here are 20 things you can negotiate that will either improve gross
or net margins:
Trade discounts (percentage off list price)
Quantity discounts (based on volume bought)
Seasonal discounts (incentive to stock out of season merchandise)
Cash discounts (reduction based on when bill is paid based on dating of the invoice)
Slotting allowances (paying for shelf space)
Markdown guarantees
Promotional allowances
Rebates (refunds from vendor which does not impact markdowns)
Payment options
Payment periods
Credit terms
FOB Origin or FOB Shipping point (e.g. centralised warehouse)
FOB Destination (with or without charges reversed)
Free/additional POS material
Exclusivity (for an area or for a period of time)
Cooperative advertising
Pre-ticketing/tagging/labelling
Packaged for resale
Field Merchandising and stock rotation
Dating (when the discounts etc. come into effect.) For an example of how to calculate the benefits, check this out. This example shows how a seemingly insignificant three per cent early settlement actually translates to >50% in actual fact.
You won’t get everything from everyone – but all the little bits help.
Have fun
Dennis
GANADOR: Solutions to change organisations from the inside out to focus on the customer.
