Survey

In spite of high inflation some cost savings were obtained. How much net cost changes in the last 6-12 months did you obtain over or under the budget?

More than 10% under.
1 to 10% under.
No change.
1% to 5% over,
6% or more over.

The other day one of our members said he could not save much from his purchasing effort because of the b..." />

Now Is The Time To Reduce Prices

Date: 12/01/2008

The other day one of our members said he could not save much from his purchasing effort because of the bad economic climate. This buyer may have forgotten some of the principles of economics. Normally, when sales decline, business is more willing to make concessions. Those concessions may be in the form of lower prices or they may be in the form of other incentives to encourage purchases.

Economists worldwide are currently predicting deflation rather than inflation. In other words, prices will go down. This is already becoming apparent on some items, such as stocks, and commodities, and the decline is likely to spread to other products as well.

But not all the declines will be automatic. Buyers who fail to ask for price reductions or other cost saving measures will continue to pay more than those buyers who are more aggressive.

Take the price of gasoline as an example. Only a few months ago gas prices were high. Suppliers of all types of products and services were adding surcharges to their prices because of the high price of fuel. Now with much lower fuel prices, many of the suppliers may fail to remove those unjustified surcharges unless asked to do so by the buyer.

Even though suppliers may not have itemized any surcharges on invoices, they still previously may have justified price increases or other extra charges because of the high price of gasoline. The buyer may have agreed then, but now is the time to get those increases and other extra charges rescinded.

As the economy continues to be in a slump, more and more companies will become hungrier for business. They will be offering lower prices and better deals. If existing suppliers fail to remain competitive, buyers should seriously consider changing sources. That does not mean this should be done lightly or without carefully checking new potential sources. If you have longtime good suppliers, you should stick with them as long as it is reasonably economical to do so. But if they are good suppliers and value your business they should remain competitive.