Companies spend a significant amount of their resources to advertise their products. Conseq..." />

Negotiate Private Labeling to Reduce Costs

Companies spend a significant amount of their resources to advertise their products. Consequently the cost of the marketing effort is included in the total cost of the product. The price includes all the costs plus a markup for profit.

Buyers can negotiate for their own brand of the same or a similar product without the cost of advertising and marketing expense. The generic or private label product may be identical to the supplier’s brand or have slight differences. Differences that matter little may be in size, color, dimensions, packaging, or material specifications.

Don’t assume that only the largest volume buyers have the clout to obtain private labeling. Interested suppliers can be found for a variety of products - some normally produced in low volume. In addition, some suppliers specialize in producing products to the customer’s specification. Such companies spend little on advertising and often can offer their products at a low cost.

For example, if you buy branded paint from the most popular companies, you may be paying more than necessary. There are thousands of paint manufacturers in the U.S. and most are willing to prepare the coating you want at a low cost. You would need to order enough to make production economical, but it may not be any more than you really need. Check it out.

Another example is the case where you ask for an item to be packed in bulk rather than having each piece individually wrapped and packed in a colored shelf box. By doing so you eliminate the cost of the shelf boxes and you save the labor and machine time of the supplier packing each piece. Incidentally, you also save your company the cost of removing the item from the shelf box.v