Contractors rely on vendors to supply a wide range of products, everything from paper clips to a 4,000-gallon vacuum truck. But how can you be sure you’re receiving the best value for products and services? To ensure a company’s long-term prosperity, the buying side of the business — not just the selling side — needs to be managed profitably. Choosing the right vendor is an important buying decision.

“You have to find somebody you can trust, who doesn’t try to sell you something you don’t want and helps you find what you do want,” says Tom Frank, of Tim Frank Septic Tank Cleaning in northeast Ohio.

“You want someone who doesn’t push extra stuff you don’t need. That’s a waste of time.”

Vendors should stand behind their products and provide service after the sale, Frank says.

“If they’re giving me a good price and good service and they have what I need, then it’s worth working with them.”

Treating vendors like business partners — not adversaries — is the key to maintaining solid relationships with suppliers, says Rick Perrin, partner in the consulting firm B2B CFO in Madison, Wisconsin. He also advises contractors to purchase from more than one vendor.

“Always have two primary vendors for whatever you do. That way, you always have a backup vendor if you need one,” he says. Purchase 60% to 70% of products or services from a primary vendor and 30% to 40% from a secondary vendor, he says. This arrangement keeps the first one honest and the second one eager for more business. Having two vendors for a specific product or service creates an environment that’s conducive for negotiating.

“Many, many things are negotiable. Be creative,” Perrin says. Aside from negotiating on price, vendors can negotiate on delivery, financing, staff training or other perks. 

Shop around

High Plains Sanitation Service in Strasburg, Colorado, put its negotiating strategies to work at the 2019 Water & Wastewater Equipment, Treatment & Transport (WWETT) Show when the company was looking for a new pumper truck. It purchased a 4,000-gallon aluminum pump truck with a chassis manufactured by Freightliner and a tank from Progress Tank.

Kim Seipp, co-owner of High Plains Sanitation Service, says her husband and son-in-law, Jeff Seipp and Jeff Nicoll, did a lot of comparison shopping before making the purchase. They narrowed their options to three trucks and met with the sales reps to discuss features, price and delivery. Kim Seipp describes the ensuing negotiations as back-and-forth conversations, not high-intensity bargaining.

“There are a couple of things they negotiated. One of the things they were able to get was aluminum wheels, as opposed to steel,” she says. The aluminum wheels keep the truck lighter, which was an important feature for High Plains Sanitation Service. The trade-off for aluminum occurred toward the end of negotiations, when the deal was nearly finalized.

“By this time, the guys are into it for well over $100,000, so the company is willing to say, ‘Yeah, we can give you that.’”

When it comes to negotiating, contractors should know their limitations and know when it’s time to walk away, Seipp says. You should take your time making a purchase and not feel intimidated about asking for a better deal.

“Once you’ve connected with someone … and you’re going to spend a good deal of money, then the vendors are willing to work with you and give you some discounts,” she says. The more money that’s involved, the more leeway the vendors have to offer deals.

With over 600 exhibitors at the WWETT Show, there’s plenty of buying and selling going on.

Jody Forest, owner of Forest Septic in central Iowa, regularly attends the WWETT Show to learn about products and services and connect with pumpers working in the field. He switches vendors based on what he sees at the show, plus recommendations from other pumpers.

When he purchased his last two vacuum trucks from Pik Rite, the purchasing process was easy. He says he used the same straightforward approach with Pik Rite that he likes his customers to use with him.

“I told them what I wanted, and really, pricing wasn’t discussed much because of their reputation. I trust them,” Forest says. “They have to make money, also.”

Maintaining relationships

Negotiating with vendors isn’t a routine practice for Frank, either.

“We don’t do a lot of negotiating with our customers and so, therefore, I don’t expect my vendors to negotiate with me,” he says. “I’m relying on them giving me the best price they can give me.”

For Chris Larson, vice president of operations at C&L Water Solutions in Littleton, Colorado, buying decisions are less about negotiating and more about maintaining relationships. Vendors don’t want to work with someone who consistently tries to beat them up on price or nickel and dime them after the sale, Larson says.

Yet that doesn’t mean you shouldn’t negotiate on the big-ticket items, he says. Maybe the vendor will throw in something for free, like a hitch on a truck or an upgrade to a tire package.

“Just ask them, ‘Can you help us out here?’”

If you’re familiar with what your competitor is paying for a product or service, ask the vendor for that same price, he says.

Once C&L establishes a solid relationship with a supplier, it’s unlikely to change — unless there are issues with customer service. When a vendor is no longer providing the service you need, it’s time to look into other options, Larson says. Another indicator that it may be time to switch is when product reps change frequently. With consistency comes the knowledge and experience you need when issues pop up. 

Suppliers should be integrated into your company as much as possible, as an essential partner in the business, Larson says.

When you speak with a vendor, remember that you’re talking to another human being, not simply a means to an end. “Don’t treat them like a cog in the wheel,” he says.

The wastewater and sewer industry has a limited number of suppliers for some of its key materials. Mergers and acquisitions have reduced the number of vendors even more. While contractors are benefiting from the lower prices offered by the larger corporations, the contractors also have fewer vendors to choose between. This is just one more reason to be on good terms with suppliers — so you continue to receive the products and services you need without interruption.

Ongoing communication is essential, Perrin says. It’s important to schedule an annual pricing review with key vendors and touch base when prices fluctuate. Talk with your suppliers about passing along any price reductions they receive, and ask them to confirm price increases before they bill you.

Perrin also suggests collaborating with vendors to find ways to reduce costs. Can you replace expensive materials with less expensive ones? Lower your freight costs by choosing a different carrier or using your own trucks to transport products? Earn discounts by buying in bulk or paying promptly? All of these savings add up over time.

“The vendors know the equipment and parts better than anybody and can provide recommendations that should be helpful,” Perrin says.

Vendors often have pricing tiers, based on volume purchased. The more you buy, the greater the discount. If a vendor doesn’t have pricing tiers, contractors should ask for price reductions as their volume increases, Perrin says.

“Sometimes the price is fairly fixed, but if you’re in business and you’re not negotiating, you’re leaving money on the table.”

A spirit of collaboration between contractors and vendors can increase the profit margin for both partners. Vendor relations boil down to one thing: creating reciprocal business relationships in which everyone benefits.