How?
- Ask for extended terms If the standard is 30% upfront, 70% on completion, ask for something more favorable like 20% upfront, 80% on delivery.
- Ask for volume discount tiers / price breaks Usually suppliers will have lower prices as the quantity you order rises. Find out where their price breaks are.
- Early payment discounts If you pay early, will the supplier cut you a deal?
- Price matching Search out other suppliers. If you find a lower price somewhere, see if they'll match it.
- Value-adds See if they'll add in free delivery, inserts, high quality packaging, free samples, etc.
- Year-out forecasting If you commit to a larger order (say a year out), will they discount the price?
- China has a word for relationships — Guanxi (but relationships are important anywhere) Building personal relationships with your suppliers can be crucial in facilitating negotiations.
- Clearly communicate your expectations Misunderstandings and assumptions can lead to disputes and quality problems.
- Watch out for pushing too hard on price A supplier may see this as you trying to sacrifice quality.
- Take your time (have other suppliers) The person who cares least in a negotiation wins.
Real Negotiation Scripts You Can Use With Suppliers Today
Knowing you should negotiate is one thing. Knowing exactly what to say is another. Here are word-for-word scripts that have worked:
For volume discounts: "We are currently ordering [X] units per order. If we increase to [1.5X-2X] units, what pricing can you offer? We are looking to build a long-term relationship with a supplier who can grow with us."
For payment terms: "We have been paying 30/70. As we scale our orders, we would like to move to 20/80 or net-60 terms. Our track record of on-time payments should give you confidence."
For shipping cost reductions: "Can you include shipping in the unit cost? If we are ordering [X] units regularly, there should be room to build logistics into the pricing."
For competing quotes: "We have received a quote of [$X] per unit from another supplier for a comparable product. We prefer working with you because of [quality/communication/reliability], but we need the pricing to be competitive."
The key to all of these: be respectful, be specific, and give the supplier a reason to say yes. Suppliers are running businesses too.
Frequently Asked Questions
How do I negotiate lower prices with Chinese suppliers on Alibaba?
Start by ordering samples from 3-5 suppliers to establish relationships. Then ask for volume pricing tiers, extended payment terms, and included shipping. Always reference competitive quotes. Chinese suppliers expect negotiation.
What payment terms should I negotiate with Amazon FBA suppliers?
Standard first-order terms are 30% upfront, 70% before shipping. After 2-3 successful orders, negotiate toward 20% upfront, 80% on delivery or net-30 terms. Better payment terms significantly improve your cash flow.
Is it okay to show suppliers competing quotes to negotiate better pricing?
Yes, it is a standard business practice. Be transparent and do not fabricate quotes. Simply state that you have received a lower price from another supplier and ask if they can be competitive.