Watch Out For Tricky Pricing

It is difficult to properly evaluate the true cost of a product. The first thing that buyers look at is the list price. They start from there hoping to negotiate a discount or reduced price before an order is placed. But the final agreed upon price can be very misleading if there are any extra charges or if other products or services are necessary in order to use the original product.

When buying a proprietary or custom product, the manufacturer may need to first have a special tool and they will charge the buyer for that tool. The tool, rightly then, becomes the property of the buyer, but an uninformed buyer may fail to take delivery of the tool after the order or keep a record of the tool in the supplier’s possession.

Thus, the seller may quote a lower price than the competition for the needed product, but charge much more for the required tool than the competition would charge.

Another add-on to the base price is for packaging. Proper packaging of the purchased product may or may not be included in the base price. It is another item to negotiate. The cost of packaging includes protection of the product, minimizing volume, and meeting legal requirements.

The charge for transportation or delivery is another cost that the buyer should evaluate and negotiate. The buyer may wish to negotiate with carriers and tell the supplier which carrier to use. But be careful here, because the supplier may know more about which carrier can deliver on-time and which takes longer.

The total cost includes any required consumables. For example, copying machines require paper and ink. The machine price may be low, but the price of the ink cartridges may be higher than it would be for machines of other brands. The amount of ink in a cartridge needs to be compared with other brands.

Quantity discounts are tricky too. It may be a good savings to buy a larger quantity if you can use the material before it deteriorates and the cost of holding inventory does not exceed any savings for the larger quantity.