In today’s article, I’m going to be sharing with you some tactics that I’ve used in the past to save thousands of dollars with different vendors, regardless of the type of vendor. By the end of this article, you’re going to have a few tactics that you can try for yourself to save yourself a couple of bucks.
Everything is negotiable
The first thing that I really want to emphasize before I dig into actual tactics is that everything pretty much is always going to be negotiable.
A lot of times, unless you’re working with something like an internet services company, you’re going to find that it is flexible in terms of pricing and what pricing actually is. Especially in the case where you find yourself in this situation where you’re a startup business owner and you just kind of don’t really have your feet under you. You’ll find that a lot of vendors are super generous in that sort of world in terms of supporting your cause.
First things first: everything is negotiable. And I want you to think about that in terms of mindset before you dig into your negotiation.
The reason why is because if you come in from the standpoint of, well, this is the price and that’s what it is, then you’re never gonna actually be able to negotiate a better deal with your vendors.
Now that we have that out of the way, let’s talk about exactly what I’ve done in the past to save thousands of dollars from different vendors that I’ve worked with.
Step #1: List all regular recurring vs. one-off expenses
The first thing I’ve done is I’ve just curated a list of all of my regular recurring expenses versus one off expenses. The reason why you want to do this is because it gives you a really clear understanding of what the potential ROI is for you actually taking the time to negotiate with your vendors.
So in the case for you are a SaaS company, it means that you need to take stock of all of the different applications that you might be paying for on your monthly credit card bill, this might be things like Trello, it might be your transcription service. It might be some other recording service and things like that. It could even be Zappier for example.
And so what you want to do is just create an active spreadsheet of all the different subscription services that you might be paying for. An easy way you can do this is you can just do an export of your company’s credit card to see exactly what is popping up multiple times over the course of a three month time period. That is going to tell you the sort of stuff that you are regularly paying for in the case where you don’t know that right off the top of your head.
Step #2: Organize things based on most expensive vs. not
The second thing that you’re going to want to do though is from here, you’re going to want to start to organize things based on what is most expensive and what is not.
If for example, you are paying for a service that is $200 as opposed to another one that’s only $20. Well, cutting down that $200 a month bill is going to be way more impactful for your business than cutting down the $20 a month bill.
Step #3: Collect all key contact information
The third thing you want to do is you want to collect all of the contact information of the key people that you talked to at that company before upgrading. In the case where you didn’t actually talk to anybody at that company before making that buying decision, what you can do is you can just check out the contact us page or the support page for that respective business. In the case where you don’t want to do that yourself, just task it to a virtual assistant of yours so they can do that research for you.
Step #4: Start reaching out
And then the fourth step is really to start reaching out to all of these respective vendors and asking for a price break. Here’s typically the sort of template that I have used when it comes to making this ask.
“Hey [vendor], it’s been really great using you for the last X number of years, and we’ve been really happy customers. That being said, given everything that’s going on in the world right now, and our business currently experiencing a little bit of a slowdown in growth, we’re having to find new ways to cut expenses.
As a potential place to cut costs, we started to look at our contract with [vendor] I was wondering if there could be a potential price break or some sort of deal that you could offer us for the next six to 12 months to make things a little bit easier for us. We greatly appreciate your support and thanks so much either way.” and then you’re going to want sign off with your name.
Now, obviously, you can use whatever template you want, but at the core of it, here’s what you need to emphasize. One, you have been a loyal customer with them for whatever period of time that it’s been. In most situations, I would recommend that you try to negotiate with vendors that you’ve used for at least a year or so, because you have that sort of customer loyalty built up with that vendor.
The second thing that I emphasize is that things are tough for your business and that you’re really looking to make things more cost-effective or economical in the coming few months.
The third thing that I emphasize is that I’m willing to actually sign a longer term deal. The reason why is because that’s going to help the vendor think about the fact that you’re not just trying to get a deal out of them for the next month, but you’re really trying to stay active in this two-way relationship of being a customer of theirs.
And the fourth thing that I emphasize with this template is that it’s okay if they say no. This gives them an easy out in the case where they’re not able to do anything.
Notice how I’m not trying to be forceful with anything at this point in time in the negotiation, I’m simply trying to lay out the case that things are kind of rough for our business. We’re looking to make some cost cuts and that they are kind of on the chopping block. And so it puts the ball into their core in terms of whether or not they want to be so kind as to provide some sort of price break for you.
Another thing you can do, if you want to improve that template is you can also mention that you are an early stage company or that you’re not really that big, you’re mom and pop sort of feel. That can give some of the warmth and fuzzies in terms of potentially the recipient of that message wanting to do you a solid.
Step #5: Take a look at all the responses
From here, the fifth thing you want to do is take a look at all the responses that you’re going to get from these vendors. The last time I did this was at my last company. It was during the peak of the global situation that happened. And pretty much we reached out to every single vendor that we were spending money with.
And we ended up saving tens of thousands of dollars because at that point in time, everybody was kind of freaking out about the state of the world. And so all these sorts of customer support teams, as well as retention teams were giving out deals that were unprecedented in terms of helping these businesses get through this sort of next roadblock.
Now that being said, our business actually did need to cut costs at that time. From just reaching out and making the ask, we were able to cut down our expenses significantly for the next six to 12 months, just because of this sort of simple template. All it took was just asking. And that’s what I really want to emphasize when it comes to negotiating with vendors, especially in the case where you are working with other B2B SaaS companies, you have to understand that their margin is oftentimes 80% plus in terms of the profit they’re making off of you.
When they sell an additional customer, it’s not costing their business all that much more in terms of server costs and things like that. So that means that there is room for negotiation for you when it comes to getting yourself and your business a deal.
From here, assuming that you’ve been successful, what I then recommend you do to make this scalable over the long term is to create a tracker for yourself. That way as you hire an operations person or an office manager in your company, you can actually have them do that sort of outreach on an annual basis to see where else you can stack deals.
In the case where you don’t want to ask for a deal every single 12 months, what you can do is you can space it out to every 12 to 18 months, but I always recommend that you try to restructure the contracts of the deals that your business is making. The reason why is because all of these companies are often trying to find ways to upsell and expand your accounts.
And that being said, they often still do care about their retention as well. And they want to make sure that you are still happy. And it’s really important that in the case where you’re paying for a company every single month, you feel like you’re getting a great deal out of that as well.
In the case where things don’t work out is your first ask, you can always come in from another angle as well. You can emphasize, for example, how maybe the product’s feature set hasn’t changed all that much over the last six to 12 months. So you don’t feel like you’re getting as much value or full value out of the sort of product. The worst case scenario that’s going to happen in that case is if they don’t give you some sort of deal break, what they’ll often offer you is more personalized customer success support, which is going to be useful for you anyways in your business.
So all you need to do in that particular situation is again, just state your case. Say for example, that your budget is pretty much used up for the quarter, and this is what you have left. And then ask if they’re able to meet you at that point or do something close to that, or reframe the offer of whatever it is their exhibiting package is.
Most people don’t make this ask and that is the biggest difference between businesses that survive in downturns as well as businesses that continue to get great value for the different services that they contract.
If you liked this article, be sure to check out my YouTube channel to get new videos every single week. I’ll help take you from zero to self-starter as you grow your business, get more customers, and hone your business acumen. Also, feel free to share this with anybody that you think might benefit from how to negotiate with vendors.