Trade Resources Blog How to Negotiate MOQ Price Effectively

How to Negotiate MOQ Price Effectively

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By Celinelee on Sep 22, 2021
Tags: moq price

When you firstly start out buying from suppliers, you will encounter several firsts.  One of the first items you will have to master to get good deals on your supplies is the MOQ price.  This is the minimum order quantity, and the price you call for a set minimum amount of units can make or break your opportunities of breaking even with your investment. If you have a high price for your order, it could hurt your chances of earning a profit or potentially start a poor relationship with a potential seller.

In this article, we will discuss how to negotiate your prices effectively and the steps that you have to take to be prepared for discussions with your suppliers.  No matter your experience level when purchasing from wholesalers, you can learn the steps needed to be ready for all business agreements.  We've provided you with everything you need to know in this article and even more. So, let's get into the details, and we'll uncover some of the steps to help you negotiate effectively. 

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Why Does MOQ Price Matter

You might not think that this matters, but you would be surprised! Your minimum order quantity is significant and can be part of what makes or breaks your deals.  Every seller has their minimum order that they will fulfill.  For some, they are generous and will fulfill orders as small as a dozen.  Others want to have people purchase up to one hundred units at once, and this can be difficult for small businesses and those just starting with selling to their customer base.

The price you pay with your order matters, and it is part of the balance sheet that keeps your business running smoothly.  Luckily, even if you encounter a problematic supplier, you might be able to negotiate your prices.  This is where you can shine and make sure that you find a reasonable price for both you and the seller.  However, you have to follow a specific set of steps to make sure that you negotiate effectively and still respect the seller's value in their product.  Here's how to negotiate your MOQ price effectively every time.

How to Negotiate Prices with Sellers

Try for a Quick Deal with Your Supplier

One of the tactics that you can use that definitely will work is to try to close the deal right away. It might seem a little bit rushed, but if you get a contract right away with a new vendor or seller, you can typically start a long-term relationship with them. This is important because even if they have a higher required unit that they will sell for their minimum order, you can still likely get lesser units if you promise to have a long-term business with the seller.

When it occurs, the best way to negotiate this is to lower the units and keep the price adequate, appease the seller, and respect the value of the product you're purchasing for the customer base you have.

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Pay More Than They Are Asking

Another tactic you can use is that it works, and sellers enjoy it if you offer to pay more than others. If you're looking to buy more units, you probably will get a deal with less price per unit. Still, if you're looking to buy fewer units than they're offering for their MOQ price, then you probably will want to contribute to pay more and receive less, which will put you in good graces with your supplier.

This is also an excellent tactic for long-term relationships to show your respect for the business relationship you have and satisfy both parties. So even if you end up paying mere cents more than you were before, it's still worth investing in their relationship and finding a good supplier for your business.

Use Installments or Payment Plans

Another way that you can make sure that you can afford the items you would like to buy is by paying in installments or with the payment plan. Of course, not all suppliers will negotiate with you in this manner, but it's essential that you try to be at your best. This can help you offset your costs and keep you financially stable while you're waiting for your product to sell.

It's worth noting that not every single vendor will do this, and not every vendor will offer this every single time because it's complete vendors at a disadvantage. However, when you pay in installments, you likely will also receive the product installments. This is something to keep in mind if you're looking to have a consistent flow of products or are concerned about receiving all of your orders and do not want to wait a significant amount of time between the installments.

Combine Your Orders If You Can

You might get lucky and order from the same seller for multiple products, which will help to lower your MOQ price. In addition, by ordering various products from the seller, they might be inclined to give you a discount because you're showing good loyalty to the business. With this in mind, you can likely encounter a better deal on the minimum order than before if you have two or more items you're purchasing.

This will make the desire to purchase fewer items even easier and also give the seller award for allowing you to do so because you're giving them more than just one item worth of business. However, it would help if you did not go into multiple orders from the same seller unless you're entirely comfortable and you feel prepared for the financial investment that it will be for your business. 

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Find the Right Seller or Vendor

One shared way to make sure that you have a low MOQ price is to find the right factory or right vendor for you to purchase from. Not every single seller will be created equally, and they're not going to have the same quality product. There might be several hundred if not thousands of individuals who produce shoes for your particular style that you're seeking, but not everyone is going to be able to fulfill the order that you're looking for. 

Depending on your needs as a business, working with smaller manufacturers can help you achieve a lower MOQ price. In comparison, more prominent manufacturers tend to have higher quantities required for minimum orders. This is important to keep in mind, especially as you get used to the industry and the items you're purchasing from the particular sellers you have found.

Order at a Good Time

Now, you might be saying to yourself that there is no good time to purchase a particular item from a seller. However, this is primarily debated upon, and the MOQ price shows that this is true. There is a great time and a wrong time to buy an item, and you should make sure that you place orders at an appropriate time. You want to avoid holidays because it's going to be a significantly difficult time for manufacturers to get their products on the way to you.

Additionally, you probably also want to avoid challenges and trade or other current events that could likely disrupt the markets, which is why it's essential to pay attention to global news and also holidays and the time of year that you purchased.

Focus on Building a Business Relationship

In business, it's all about whom you know, which is why you need to build relationships with the individuals that you purchased from. It is more than just finding the right vendor to buy from; it's also about finding the right seller in the right relationship. If you're doing this correctly, you'll end up finding vendors that you'll work with for many years in the future.

This is how most people get lower MOQ price estimations for their products and how they can build relationships where their prices are discounted compared to when they firstly started purchasing from the manufacturer. Focus on building meaningful relationships and business connections with individuals in your industry. As a result, you'll be able to achieve lower prices and lower minimum order requirements for your supplies.

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Know Your Breakeven Point

Knowing when you break even is significantly vital to the longevity of your business, but also to what MOQ price you can accept from the seller that you're looking to purchase from. The best way to calculate your break-even is to understand your finances as a company and to understand what you're able to afford. The worst thing that you can do for your business is investing more than you can, which will lead you to more debt and more challenges in the future, especially if you're looking to order hundreds of units of an item. 

Calculate precisely how much you can spend, and then look at the prices for the minimum orders. This will help you get a good idea of what you can do with the seller and whether or not you will have to negotiate. Fortunately, you will still have the ability to intervene in most circumstances, which will help you create more connections and foster more of a relationship with your sellers to benefit both of you in the long term.

Purchase a Sample Order

If you are really at a loss and cannot negotiate your order down, you can ask for samples firstly to make sure that you can purchase this item and then build a relationship with this individual. You can confirm the quality of what you're looking to buy, as well as understanding precisely what the minimum order will provide you with.

The only thing that you need to keep in mind is that with most sample orders, the intention is that you will continue working with the client in the long term. For example, suppose you intend to gather samples from several different vendors. In that case, that's exceptionally fine, but you must be serious about continuing conversations and eventually having to choose between which vendors that you like the most. In some cases, you can also use your first-time buyer status to your advantage and work with sellers to create a deal that satisfies both of you.

Pressure Your Seller

It's not the first choice for negotiating, but it is an option that you can pursue. For example, if you think that the supplier is the best bet you have for your items, you can offer a MOQ price and pressure the supplier to decide within a couple of days. You can even make the intention to mention that you have other people that you are contacting, which will put pressure on them to make a decision. Even though you might not think this is entirely a great idea, you'll be surprised how effectively it can work in some scenarios.

When they hear that a buyer is looking to purchase from multiple other individuals and that they have to make a decision, most sellers will think critically about the situation they have in front of them. If you've already collected samples from the seller as well, then you likely will already have a bit of a relationship made so that you can make an offer and hope that they agree or counter. Therefore, it's best to approach this with confidence. However, don't be too aggressive with your negotiating and your pressuring of the seller. This will likely turn them away from wanting to do business with you if you are too bold!

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Conclusion: Do Your Research!

Negotiating is not a difficult skill, but it takes practice, especially if you're a first-time business owner looking to outsource from China. With these tips in mind, you'll still be able to significantly impact the relationships you make and how much effort will produce a result that you're happy with. Of course, most sellers would be happy to negotiate on a MOQ price, but every seller is satisfied with a long-term arrangement and business relationship that you can count on.

Do your research, understand your industry, and take these tips with you for the future. With all of this in mind, you'll be able to make significant negotiations and make the connections that you need to make your business flourish well into the future.

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