We do not compete on price at the small business level. Nonetheless, price naturally comes up in discussions.
Any buyer worth his salt is going to squeeze you on price. It is his job to do so, to discover what your true price is, what you are willing to sell for. The buyer must also defend the agree price to his boss, with evidence, better in writing, that you refused to fold on price.
When a buyer tells you your price is too high, don't listen. If the product is new to the buyer, he cannot possibly know whether the price is too high until he tests it.
You are giving the buyer and moq fob to test out everything, including the price. So when a buyer squeezes, don't give in. Here are some scenarios:
1. If he goes after you ExW price, reply there is nothing similar and he must test the price to know if it is wrong or right. If he goes after FOB price, tell him there will be economies of scale to factor in if and when he will be ordering in larger quantities.
2. If the buyer ignores you and just says "I need this price" and names one, then they have done their research and know what putatively competitive products run. Differentiate the product and point out he'll miss offering new if he won't pay the price.
3. If the buyer says something vague like the "price is too much..." then he has not done his homework and he is just squeezing by rote. Wake him up with a grand "Of course you want a lower price! We all do. But any lower and I will go out of business. This is the right price, and you need to test it in your market."
At the small business level price is not the concern. If anyone brings it up, make it go away without cutting price.
Feel free to forward this by email to three of your friends.
Any buyer worth his salt is going to squeeze you on price. It is his job to do so, to discover what your true price is, what you are willing to sell for. The buyer must also defend the agree price to his boss, with evidence, better in writing, that you refused to fold on price.
When a buyer tells you your price is too high, don't listen. If the product is new to the buyer, he cannot possibly know whether the price is too high until he tests it.
You are giving the buyer and moq fob to test out everything, including the price. So when a buyer squeezes, don't give in. Here are some scenarios:
1. If he goes after you ExW price, reply there is nothing similar and he must test the price to know if it is wrong or right. If he goes after FOB price, tell him there will be economies of scale to factor in if and when he will be ordering in larger quantities.
2. If the buyer ignores you and just says "I need this price" and names one, then they have done their research and know what putatively competitive products run. Differentiate the product and point out he'll miss offering new if he won't pay the price.
3. If the buyer says something vague like the "price is too much..." then he has not done his homework and he is just squeezing by rote. Wake him up with a grand "Of course you want a lower price! We all do. But any lower and I will go out of business. This is the right price, and you need to test it in your market."
At the small business level price is not the concern. If anyone brings it up, make it go away without cutting price.
Feel free to forward this by email to three of your friends.
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