THERE IS AN ANCIENT TERM in business, that you earn when you buy. This historical saying is a very important touchstone for today's trade. As you know, competition in trade has increased tremendously, especially with the effect of digital transformation. At the end of the day, the sensitivity shown to price during purchases in such a crazy race period will have a great financial return. In today's article, we will focus on what should be considered when making a purchase, and under which conditions the commercial transaction will be more efficient.

Making a price comparison: Let's say you are a business person based in Rwanda and you want to import a new product for your business. Let's consider the product you want to buy is a furniture group. You go to fairs and do research to get to know the manufacturers of this product group betterly. At the end of the day, you have came to a serious point with 3 serious suppliers and you are at the phase of receiving price proposals. So what should be done at this point? In my personal opinion, first of all, a detailed research should be done on the furniture prices in Rwanda market. What types of furniture are on the market? At what prices are these product groups sold? Are the new furniture groups you will import able to compete with the products in  Rwanda market? Suppose you have agreed with the Rwandan market on product groups. The most important point left - Pricing. Here, you have to negotiate for a tight price with the 3 suppliers you have left for the final. Getting the best quality product at the most affordable price is one of the main principles in trade. Let's consider the selling price of a 3-seater sofa as 300 USD in the market. Since you are a new entry to the market, you should not exceed the average price in the market, but you want to get a good profit margin from the product you bring. In this case, the necessary move is to get the most competitive and reasonable prices from your supplier when purchasing the sofa. Your final sales price for sofa will be 300 USD at Rwandase market and among your purchase options there are 3 selections. First one is 190 USD, the second is 185 USD, and the third is 165 USD. At this point, which product would you prefer? Of course, the 165 USD one if there is no concern about the quality and service. So how did you come to this conclusion? Because you did your research by interviewing many suppliers. You have determined your candidate suppliers according to your criteria. And finally you identified 3 manufacturers that will give you the most price/quality performance. After that, it's entirely up to your commercial target and perspective. If you want to obtain good profit margins without exceeding the average price in the market, you will start the import process by choosing the affordable product. 

Give an order projection to your supplier : As I mentioned in the previous lines, when purchasing your product, the more affordable the best quality product is, the higher your profit margin will be at the end of the day. If you are targeting more reasonable accounts in your purchase price, try to give your supplier quarterly order projections. For example, let your supplier know the first quarter orders of 2022 from today. Rest assured, this approach will definitely reduce your purchase prices and enable you to reach your profitability targets faster in the medium term.

Never hesitate to bargain : I know some people, they get embarrassed and tense while bargaining. I think bargaining would be one of the most enjoyable part of the trading. We can even imagine bargaining as a way or style of life. Imagine, as a Rwandan, you go to your potential supplier and you have a huge order in your hand and money in your pocket. You are the strongest party in this business activity. Your supplier is ready to do anything to woo you. Its sole purpose is to grab the official order from you and get paid. In this case, the cards are in your hands. How would you like to deal the cards? open all at once? Or by slowly pulling down the prices with a nice negotiation? I think the strongest should take everything on the table. And you are the strong one. Please never hesitate to negotiate price.

As a result, the essence of trading is to profitably sell your purchased product to the market. For this reason, it should never be forgotten that the best money is earned while purchasing the product which also enables very much the personal satisfaction.

The views expressed in this article are of the author

cperdar@gmail.com