Saturday, October 15, 2011

Price is Too High

What are you saying when you lob at your supplier the simple sentence, “Price is too high.”?

“Jacob what I’m saying is, is that the price is too high”.

Too high for what?  Too high in comparison to what?  What does that mean…? 

If you think deeper into that comment the ambiguousness of it will start to emerge.

During your importing trials and tribulations, throwing out that statement to a supplier or factory, especially in dealing with China, tends to do more harm than good.   It doesn’t add anything meaningful to the project and keeps all parties at a standstill, at square number one. 

Too high for your budget or too high for you to afford?  If that’s the case, then it’s not necessarily the price’s fault and it seems the price is taken undue blame.  To round off that sentence, you could say, “The price is out of my budget”. 

Too high for what you’ve got in mind?  Perhaps you’re talking a low to medium quality item but your supplier is quoting a higher-end piece.  So is the price too high or is there a gap in comparison of apples to apples?  In this case, express sets of samples to your supplier, further detail them on budget ranges, points of quality to eliminate or add-ons that you could do without.  This is a persistent problem in promotional item manufacturing; buyer and supplier not on the same page.  

Too high for you to make the margin you were hoping?  In this case, Mr. Price is taking another unnecessary hit and what you mean to say, is “I need to make more margin”.  We need to all look at Mr. Margin.  Perhaps Mr. Margin needs to have a meeting with the above point on how to make sure buyer and supplier are properly comparing apples to apples.    

Too high in comparison to all the other similar suppliers and items on the market?  In comparison to market value, this item is overpriced.  Ok, fair enough, but let’s talk some strong numbers.  Give your quoting supplier an indication of what’s found out in the field.  But all too often, when a buyer lobs the “too high bomb” at you, they seldom mean this example and haven’t done further market research or they would add that on to the commenting mix or simply move on to a reasonably-priced supplier.     

Too high for me to present these numbers to my brands / end-users/ / buyer.  This is can be a case of changes in the market;  price of materials went up or the factories raised their prices.  Buyers go cold on offshore projects and don’t keep their customers properly updated on the changing markets.  If there is an item you frequently order, even when not ordering, get quotes every so often and stay on top of your items, so when changes do take place, it’s not like a bucket of cold water.    

… You get my drift.  The reason I’m laboring this point is because when you throw out that empty statement without support and solution-oriented steps behind it, it’s doing nothing for the project.

You feel frustrated as if you’re being charged too much.

The supplier is in the dark, because you’ve made them think they are overcharging but they may very well be offering a reasonable market value price.  The supplier starts considering you to be a bit “batty” and you are labeled as a “problematic client” to the factory

It’s possible you don’t know the product well enough that you were hoping to import and haven’t stayed on top of market values or changing price and material trends.  You say that as a way to smooth over the fact you haven’t done due diligence.

The supplier (in your mind and possibly by word-of-mouth) gets labeled as a high-priced supplier and this is unfair.  If you haven’t done due diligence to assure the price is truly too high, then that statement and thinking can only unjustly hurt another business.

When importing and discussing price, make sure comments are precise and effective (which more often than not are nowadays via electronic communication). Make your words something the supplier can use and also that will empower you as a buyer. 

Make an effort to reduce empty phrases and go for pointed, direct hits that bring your project to fruition or either allow you to amiably and professionally part ways.

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