Negotiating Discounts from Distributors and Manufacturers

Author: Brian Rhodes, Published on Feb 17, 2012

In competitive bids, an integrator's threshold between profit and loss can be very narrow with a single point being significant. Sometimes, purchasing large volumes of equipment seems to be the only obvious way to get discounts. In this update, we examine other tactics to successfuly negotiate additional discounts from your distributors and manufacturers.

Here are the six recommendations with details to follow:

  • Ask the 'Regional Sales Manager' (RSM) of the manufacturer who is 'the best' distributor to buy a specific product through.
  • Ask all your local distributors to provide written quotes on the same 'bill of materials' (BOM).
  • Involve your distributors on the front side of all big RFP/RFQ responses.
  • Take advantage of 'project' pricing programs and discounts.
  • Make it very clear to your RSMs where you stand with proposing their company's equipment.
  • Negotiate with the distributor or RSM to include free manufacturer training into a big sale.

Ask the 'Regional Sales Manager' (RSM) of the manufacturer who is 'the best' distributor to buy a specific product through.

This basically comes down to asking which distributor the manufacturer RSM likes best. RSMs may know which distributors have current promotional deals or buy product the cheapest. Being aware of this information can result in buying at a better discount, but sometimes it is just the RSM trying to 'grease the gears' by throwing business to a favored distributor.

Ask all your local distributors to provide written quotes on the same 'bill of materials' (BOM).

Distributors will often price match each other. Pick the overall lowest quote, and if they are high on one or two items, let them know 'where you need to be' in order to buy that product through them. However, be prepared for all your distributors to catch wind that you buy this way. It could impact your relationship.

Also, be aware that buying from 'non traditional' security distributors can also yield compelling pricing. Simply shopping around on the internet can turn up interesting sources of equipment from sources not specifically positioned as 'security distributors'. You might be able to encourage price matching based on those results.

Involve your distributors on the front side of all big RFP/RFQ responses.

This way, distributors have time to work their own internal resources to find you the best price/ alternative products/ ready-made kits for you to propose. Simply making sure that you communicate your project requirements clearly (without the rush of an urgent deadline) can bring surprising pricing results from your distributor.

Take advantage of 'project' pricing programs and discounts.

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Even if you are not sure of the final disposition of equipment/quantities for an opportunity, fill out the pricing discount application with enough dollars of equipment and enough differing products to give you enough information of how to build your final quote as details are refined. Even if the final project proposal falls 'just short' of meeting the minimum dollars to qualify for project pricing, you can directly appeal to your Distributor or RSM to honor the discount pricing already extended.

Make it very clear to your RSMs where you stand with proposing their company's equipment.

If you hate a manufacturer's stuff, tell them so. Be upfront when telling them why. They will work hard to change your opinion, often in the only manner that they have authority: pricing.

If high pricing prevents you from competitively proposing good equipment, make sure that the manufacturer's RSM understands this. They may not be able to change things immediately, but this feedback is helpful for them to hear and elevate to the 'upper echelons' of the companies they represent. Knowledge of your local market may help a manufacturer price equipment in a way that makes you more profitable.

Negotiate with the distributor or RSM to include free manufacturer training into a big sale.

A common complaint of integrators is the cost of training on a manufacturer's product. Though this negotiation does not directly affect the cost of purchased equipment, it may result the integrator spending less money to install it. Be upfront in telling your RSM that having trained installing technicians will deliver a better end-user experience for that company's equipment.

Comments?

While we have had success with the tactics above, negotiating discounts is certainly more art than science. Do you agree? Disagree? What other tactics do you use?

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