What competitors will do.
Despite the initial emotional reaction, vendor price increases can be opportunities to increase profits and efficiency. I'll explain.
Opportunity 1
Many companies, especially in competitive industries, are tempted to pass along a price increase dollar-for-dollar. In other words, if it costs them $100 more to produce a job, they add $100 to the job.
But that’s a costly move. It actually decreases a company’s profit margins.
In Supplier Price Increases Are Your Friend, Dr. Albert Bates shows the math behind why the dollar-for-dollar increases should be avoided and how a “percent-for-percent” increase will grow profits.
Opportunity 2
Expand your network of resources. For example, in working with the resources of a trade printer like us, you might find that you can outsource some of your in-house work at a lower cost. That could help minimize or avoid a price increase entirely.
Opportunity 3
Collaborate with other companies to increase your buying power in a mini consortium.
Sales reps are frequently willing to work with multiple companies that commit to certain levels of purchasing. The rep gets the equivalent of a bigger account. The companies get better pricing or terms.
To talk about how we can help you offset these upcoming price increase challenges, just reply to this email with some good times to talk.
Or call me direct at 559-251-8595 ext. 411.
