How to get the best pricing for your food Business

Posted by Damian Roberti on

Once you have started your food business it can be a challenge to negotiate the best price, but why? When you starting out having just started your volume of business is small. So when it comes to getting the best pricing for your products to make your business profitable it can be hard to say the least, but good news is as you grow your leverage grows as well. 


All right, guys. All right. So let's get right into it. So, uh, when you start your food business, the most expensive part of any business obviously is when you, uh, when you first start out, of course, when you get going, when you're looking to get off the ground, it can be the most expensive part because when, once you're up and running and you've got cash flow coming in, and you're able to negotiate, uh, for supplies such as ingredients, which of course, if you're into the food business, you're going to be using ingredients, you're gonna be using packaging. And you're going to be pretty much doing that in volume. Um, when the time comes for you to start selling in larger quantities. So what are some of the ways that you can, uh, understand how to actually leverage your growing business in your, in your benefit, uh, when it comes to negotiating, uh, for ingredients, uh, labeling packaging, pretty much anything you would need to bring together your food products, um, even with a co-packer actually, or even a, with a private label company, how can you negotiate that and make it work for you?

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So, number one, I'm going to get right off the bat. When you get yourself up and running, the frequency of your ordering is going to be crucial. It's going to be huge. Uh, for instance, I'm just going to use some examples here. There are some companies that we actually buy, um, some of our labels from, and we order quite frequently because we go through so many labels. Um, so what I do is what you want to do is that if you can, uh, make a contact with all of these, uh, the seven different ways I'm going to, I'm going to discuss in this podcast, if you can keep in mind that you need to create a relationship with the suppliers, okay. It's not just a matter of clicking in and onto some products, ordering it. If you contact them and say, Hey, look, my name is such and such.          NEED CONSULTING

Um, I've I created a food business. I'm going to be ordering quite frequently from you, uh, this, this, and this is going to be an item that I'm going to be needing a lot of, and I'm going to need it quite frequently. Um, so what would be your best offer or what are the best prices? What's the best deals that you have for this particular product, this particular ingredient, et cetera, et cetera. Right. So the idea is to initially set up that relationship because over the long run, that relationship is going to prove very, very valuable. Um, financially speaking, plus just as a growing business, it's going to be valuable. Um, but one of the aspects to negotiate, any type of lower pricing, or maybe free shipping or something to that effect is how often you will order, um, a lot of suppliers or companies enjoy to have love to have, of course, repeat customers.

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So as you order more often from a particular supplier, if you haven't created that relationship yet, or if you haven't started that relationship with them, definitely keep that in mind and try that, you know, pick up the phone, if you have to, or email the, the, the, the one that's in charge that the manager that's in charge of either, um, uh, the warehouse manager or, uh, the manager in charge of purchasing or, uh, ingredients and that type of thing. And you want to keep that relationship, um, as strong as possible. And of course, uh, getting to the point where you can begin to lower your prices for either the product, or you could begin to get free shipping or something to that effect. So as often as you can order from a specific supplier, that is actually a leveraging point that you can use to your advantage.

Okay. So the other thing is, uh, you want to manage or manage your inventory. Okay. So the importance of inventory management, when it comes to eCommerce is huge because in a retail store, a lot of times that physical product, what you have in stock is mostly on main, mainly on the shelf. A lot of stores do keep inventory in the back. They have extra stock, of course, but for the most part, you've got it on the shelf. And it's a matter of replenishing the shelf well on e-commerce, you know, you've got pretty much, um, uh, an amount of quantity that it available. Um, but the thing of it is, is that your customers may have a tendency to ask or request for more additional products. Um, so you want to keep your eye on exactly the inventory quantity that you've got in mind, um, because you don't want to keep it running.

You don't want to run out of stock. And of course, keeping in mind, your transit times for when you place orders for products, you don't, you don't want to under short yourself, um, when it comes to that. Okay. The other thing is I kind of want to touch on it in a while ago, was, uh, building that relationship, be patient, give it time, and, and don't be in such a hurry or don't get right up right off the bat. I'm expecting so much from a supplier when you've just initially begun that relationship. Um, the longer, of course, you have a relationship with a supplier, the better it is for, at, for real, for both of you, of course, for the supplier who is moving through a lot of product, but yourself as well, because as you, you grow, even more, you may even have the opportunity to even reduce your costs even more, or get a special deal on a certain ingredient or a certain, um, bag or a certain label, or a certain container for your food product.


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So as it goes on, the relationship builds on itself. Keep that in mind, that being patient really is financially speaking, gonna pay off for you in the long run, by lowering the cost of your product, therefore giving you a larger margin. So the other thing, the thing to keep in mind is that you want to have more than one supplier kind of shop around in a sense, um, what you want to do from that perspective is you want to keep yourself open. If you've got, let's say as an example, you have one supplier for your bags. Um, you keep in mind that there are a lot of other companies that sell very similar bags or something to the one that you're looking at. Try to keep them as a backup. And again, you can even build a rapport with them as well and have two or three companies kind of on the same level, same level, the same type of product in a sense, reason being is that if they're ever out in you're in a kind of a bind and you need to immediately, you need a, uh, let's say a quick order of bags for a big project that you have coming up and that specific supplier doesn't have it.


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Well, you have a backup supplier and you know that they've got it in stock. Um, so you have the ability to use a second one or even a third one, believe it or not. Um, there's a couple of products that we actually use, actually, some ingredients that I've got three or four, um, off the top of my head, we deal with about 50 different vendors, but I've got three or four different vendors for this one particular product, because it's something that we use so heavily that I don't want to rely on one person, because if it, if they're ever out or short and I'm going into the holiday season or fourth quarter or something, I can do a lot of it. I know that I can count on those second, third or fourth one in line. So kind of shop around, don't limit yourself to one specific supplier for any aspect of your product, labels, bags, ingredients, containers, um, any of that stuff.

Okay. Um, and the idea is to utilize the same concept that you want to build a good relationship with them, even if it's a, uh, email them right off the bat and say, look, my name is again. So it's such and such. Um, when you've got that with more than one supplier, you're going to be in a really good position to always be in stock with what you need. Okay. So the other thing you want to think about is, um, what's known as high volume purchases, okay. These are suppliers that have their own margins okay. That they need to maximize. So they're less likely to move on a price in order to a price that is too small. So if you're ordering units like a hundred units or 40 or 50 units or something to that effect, but you know that you can actually go through a five or 600 units weight to the point where you can actually order five or 600 units, or even a thousand units from a certain supplier by making higher volume purchases, your individual unit price will, will have the potential basically, of course, coming down.


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But again, contacting them and having that relationship with them. You could say, even to the point where, you know what I need a thousand of these units, and I see that the price goes down, but can you throw in free shipping? Or if I order 2000 units, can you hook, can you give me the free shipping as well, always negotiate those things. There's no reason why you can't, um, any supplier, any anyone who's in business. And if they're supplying you with something, they want to turn as much product over as possible too. So if their margins go down slightly, but you're in a position to order a couple of thousand units, that's going to be a benefit for both of you because the supplier wants to obviously push through their product and they want to sell it. And you can obviously use a couple thousand units and get them at free shipping.

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It's going to save even more money, maybe extra 10% discount, something to that effect. So these seven things are something that you definitely to keep in mind. Um, a couple more, or that you, that you may want to look about, look at and keep in the back of your mind is, uh, if you pay early, if you pay in advance. Now, what that means in a sense is having the, the ability to purchase ingredients or having the ability to purchase a bag or any of that, anything that you would need, but paying for it in advance upfront, or once you get an invoice, a lot of companies do net 30 net, 60, or net 90 paying it before the net 30 or the painted before it's actually done, give builds up a great rapport from, um, your perspective from your side of it and the suppliers like, you know what, you know, Damien's business.

Wow. He did this. Guy's paying  well in advance. Um, they're always going to look out for you. They're always going to make sure your order is correct. Make sure it ships on time. Um, maybe even potentially with pain early, you may even get yourself a discount in the future purchases. So there's a lot to think about when you get a bill in the mail, it says net 30, you know what? You don't have to pay for 30 days, but you can turn around and pay it in two days. That's actually a benefit. Not only of course, because you can pay the invoice and get it off your books, of course. But the supplier itself sees you as a, a reliable, constant payer. You're consistent. You're always ahead of the game. So in the future, it will give you some leverage where you say, you know what, Hey, I've, I've been really on top of this, this, this, you have any other discounts coming up or maybe fourth quarter, you've got something going on.

Never be afraid to negotiate no matter what time of the year it is. Okay. So the other thing, then the last thing that I want to touch on is guaranteeing your orders from your suppliers. Okay? So once you, this is actually a step to believe, believe it or not, this will be something that would really be ineffective down the road. When you first start your business, of course you can't guarantee orders because you're just getting off, off the ground. There's no rhythm that you've got. No, no, um, no sales history you've maybe just started just begun. Maybe you're just expanding, but your sales are kind of sporadic still when it gets to the point where you can see them coming in consistency consistently, and you have certain buyers from you who are buying from a, on a regular basis, then what you can do is you can actually leverage that as well.

So you can contact your suppliers and say, look, you know what? I'm ordering on a consistent basis. I've actually got 12 orders lined up. They're huge. I've got such and such and such. Um, what kind of a deal could you work on? Uh, let's say just as an example, salt or flour, let's say you're in a baking business and you need a ton of flour. How a ton of sugar, Hey, you know what? I've got these 12 orders coming up. Uh, they're very consistent. They're always on time. Can you guys work some specials or some deals with flour? I need about a thousand pounds of flour, a thousand pounds of sugar. Again, just as an example. But when you see a Dick book predictability, uh, to your purchases from your customers and you see that on a regular basis, you can actually leverage that as well.

So would that be and said, keep it in mind that these are seven different aspects of having the ability to really work the suppliers down on their pricing and using, and leveraging your business as it grows, just because of the sales itself. You can leverage that as a great sales history that you can present to your suppliers and say, look, I'm looking to get a better deal on this. I've got two other guys who can offer me at this price. Can you beat that price? Don't be afraid to, especially in a food business because, um, a lot of the supplies like ingredients, the food ingredients and such fluctuate so rapidly and can have huge ups and downs, don't be afraid to take it upon yourself, take it in your hands and negotiate those prices. Because it's going to give you in the long run, a better price point for producing your product, which is going to give you bigger margins.

And of course, more money in your pocket. That's just a no brainer, but keep those things in mind. Those seven aspects are something that really could, could weigh heavily on the pricing and could be a benefit for you in the long run. So, so I do hope that that was a little informative and a great tip on how to actually leverage your business and your sales to be beneficial for you when you start working with suppliers and, and keep in mind again, lastly, very important use more than one. Okay. So I'll wrap up the podcast. I appreciate you guys listening. If this was something that was truly helpful. I definitely give me a big thumbs up. I appreciate your support feedback. You've got questions about using your business as leveraging the business that you've got as a tool to get better pricing. If you have questions about that, let me know down below in the descriptions, I love to hear from my subscribers. And of course, I'll always appreciate you guys supporting my channel and helping me grow it. And I will see you on the next video, or I will definitely talk to you guys on the next podcast. Take care. We'll talk at you then.