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5 Reasons the Cheapest Price is More Expensive than Buying Power

Will you take an extra hour (or even 20 minutes) scouring for the best price to save the company a few bucks, or do you work on a relationship with the same distributors?

We are a price-conscious society; swept up in saving a dollar here and ten cents there.

Back in 2013, under the tenure of Ron Johnson, JC Penny embarked on a quest to kill coupons and sales attempting to wean customers off what Mr. Johnson considered “fake prices.” It seemed like a great idea; no more coupons to remember or feeling like you were missing the deal.

It failed miserably. Why? We are a coupon-cutting, deal-seeking society, and that we crave that deal. We need it. We want the story to tell our friends and family about how we went to the store during its super sale with a coupon in hand and conquered The Man with our savvy ways.

The truth of the matter is, the price usually ends up the same, but it is our experience that is different.

Take this same human behavior to your business. You’ve sold a TV (or mount, or any of the parts you can purchase from numerous distributors). You have two choices: to purchase from the same place each time, or to hunt for the lowest price, looking for that conquering feeling.

What do you do?

Will you take an extra hour (or even 20 minutes) scouring for the best price to save the company a few bucks, or do you work on a relationship with the same distributors? The easy answer seems to be to always look for the lowest price, but is that truly the best answer? Here are a few reasons not to go looking every time.

Photo: ThinkStock 

VIR and Rebates: Many companies have goals set for you to hit. If you purchase from them and hit these goals, you can get a few percent back. Cost average this amount and it can bring the prices of each piece down to the same price as the hunted price one spent time seeking out. Crestron, Atlona, AVAD, and countless others have these arrangements. Make sure you ask your distributors, and you may uncover hidden funds. If you’re thinking Crestron doesn’t count because you cannot buy it through distribution, think again. You may decide to quote a Crestron system versus another brand to hit those numbers.

Payment Terms: I buy Sonos, and I love it for its easy sales, easy setup, and quick install. But I hate purchasing Sonos. There are no terms; you buy upfront, and this can be painful when you get that credit card statement at the end of the month. If you are ever purchasing anything from Amazon and a few others, you may be paying for a product you have not yet sold.

On the other side of the spectrum are solid distributors. One distributor is offering a program for its customers where it will help a dealer’s cash flow by staging products for large projects for up to 60 days. Your terms don’t start until you pick everything up. When you are working with numerous large jobs in a small amount of time, this can become a very helpful secret.

Trips: We all remember “back in the day” when profit was stable, and trips were a plenty. If you don’t remember those days, I’m sorry as you missed a good time. While Sony and Dish may no longer be flying you to Chicago and Vegas, there are trips that still exist out there. These include line shows for products and distributors in general. Many times, depending on meeting your goals, they will offer discounts and payback towards your flight and hotel.

Specials Deals: Purchasing from the same place will also get you special deals, like “We will give you free shipping if you add on a few sound bars to that order.” Or “We will add an additional discount if you bring this unit in for a demo.” Make sure you keep asking for the best deal and what a company can do for you. The more you buy from them, the more power you will have for these requests.

Feeding the relationship: Forming a great relationship with your rep can add an extra person to your sales team. I cannot express this enough! If you are buying from them, you are making them money; therefore, they will want to help you more. If you run into an issue, guess who is going to help you out and go the extra mile? If you need something shipped quickly or need an order pushed through, they will be much more likely to help you out. This relationship can be priceless.

So next time you have the desire to find those parts a few cents cheaper, thinking you are savvy and saving the company money, think again. What is your time worth? How much time did you waste during your hunt? Buying power counts for more than we think, and the seemingly cheapest price becomes the bad decision.