Negotiate lower prices

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The old adage that farmers buy at retail and sell wholesale remains true today. However, with the current downturn in the economy, purchasing opportunities exist. Many companies have excess inventory and will sell at reduced prices. The level of discount you can get is determined by your ability to negotiate.

Often, producers are reluctant to ask for discounts or better terms. Most accept the first price offered or the price listed on the goods or services.

Here are some examples of how you can negotiate discounts.

Credit cards and loans
Many of you are deluged with credit card applications in the mail weekly. Among this "junk mail" awaits opportunities to reduce interest rates. I telephoned my credit card companies recently and requested a lower interest rate based on the offers I was receiving in the mail. All but one company lowered the interest rate by an average rate of 3.7 percent.

Another way to make your credit cards work for you is to select one that gives you one airline mile for each dollar spent. Free airline tickets start at 25,000 miles, and most dairies could receive two to three free tickets per year.

When restructuring debt, always negotiate for lower rates and better terms. Never hesitate to ask your lender for lower interest rates. The lending industry has become very competitive, and that improves your chances.

Mail-order catalogs
When purchasing from mail-order catalogs, make a list of the products you need. Then, ask the supplier if he can meet your expectations of a reasonably discounted price. Discounts of 10 percent to 25 percent are not uncommon.

I find the best prices are achieved when old-fashioned "haggling" takes place directly with the company's sales force. Shopping over the Internet doesn't always allow this option. However, browsing the Internet will help you find companies that sell the products you need and provide price information that you can use to negotiate.

And don't forget local businesses. Often, they will match mail-order prices in order to keep your business.

Terms and conditions
Sometimes, price breaks are not available, but payment terms are negotiable. Look for repayment options that are interest-free for several months. Delayed billing is another option, allowing you to move your payments to the months when cash flow is optimal.

Situations where you purchase feeds or forages from another farmer may allow for low interest rates and delayed payment, as opposed to buying feed with a bank loan.

A glut of used farm machinery and trucks exists on the market today. I have seen clients purchase used equipment with interest rates below prime or with no interest at all.

Pool your purchasing power
Large dairies often negotiate discounts on supplies and other purchases. This option is not as readily available to small- and medium-sized dairies, but if several dairies work together to negotiate a shipment, they, too, can harvest these discounts on feed, animal health supplies, farm chemicals and seed.

Other pricing opportunities exist with insurance, telephone services, maintenance contracts, fuel, and electricity. For example, a call to my cellular company resulted in a reduction in my calling plan by $50 per month.

Have your insurance agent competitively bid your workman's compensation coverage. My agent reduced my workman's compensation premium by $12,000 annually by bidding it out to five different carriers.
Don't be afraid to put your negotiating skills to work and ask for a lower price. You might be surprised by how much discounting a company may offer to get your business.

Paul Johnson is a veterinarian and consultant in Enterprise, Ala.



Negotiating skills you can learn

Here are some basic steps to help you negotiate a lower price:

1 Research the product or service, and then determine the quantity needed on an annual basis. Determine what you think would be a fair discount.

2 Make a list of companies- both locally and nationally - that offer the products you need.

3 Avoid impulse buying when purchasing goods and services.

4 Do not disregard quality of service or integrity of the company to achieve the absolute lowest price.



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