Inside Tips on Negotiating with Your Manufacturer
It’s no secret that one of the biggest factors in choosing a manufacturer is price. Engineers and buyers want low-cost parts (although a low-quality part has no value at all, regardless of the price). Manufacturers want to quote low enough to acquire the customer, but not so low that their business model doesn’t work.
Instead of shopping around for a rock bottom price and taking a risk on quality, talk to your manufacturer about how to decrease the price of your part. At Focused on Machining, we often work with our customers on price, especially if they’re investing in a long-term relationship with us. And a win-win-makes everybody happy.
One of the best ways to get a better deal on your part is to tell your manufacturer if you plan on repeat production. If you need parts a few times a year, even at a relatively low volume (as low as 10 pieces), a smart manufacturer should be willing to reduce the price—and if they don’t, come and talk to this Colorado machine shop instead. :)
How Repeat Production can Decrease Cost
I’m pulling back the curtain on our business to show you why our Denver machine shop is willing to reduce our prices for repeat production:
Programming, modeling, and set up leverage. We can spread out our engineering costs over more parts and a longer period of time. The expense of initial setup and machine programming is a lot cheaper when it’s spread out over 100 parts instead of 10. And once you perfect the setup and programming, subsequent part runs are much less labor-intensive.
Recurring revenue covers reduced shop rates. Who doesn’t love recurring revenue? If our shop can count on regular orders from your company, we can work with you to reduce rates. That’s revenue we didn’t have to generate by finding new customers, putting out new quotes, and designing setups for new parts.
Vendors often offer discounts on bulk or repeat orders. We have great vendors who work with us to offer discounts on materials and finishes for large orders or recurring revenue (I told you everybody loves it). We can pass those savings directly on to our customers.
Repeat production = stronger relationships. At Focused on Machining, we’re dedicated to building long-term relationships with our customers. Practically, client retention makes good business sense. But it’s more than practicality: we want to be your very own, go-to Colorado CNC machine shop—your source for manufacturing—and we do that working with our customers whenever possible.
Case Study
This is a real quote we submitted to one of our customers. When they told us they were doing repeat production and wanted to work with us, we were able to offer them a cost reduction of over 50% per piece.
If you’re submitting an RFQ for a part that will be produced more than once, don’t forget to mention repeat production! A manufacturer who really wants to partner with their customers should be willing to work with you on price.
Even better, save the hassle and reach out to us for your next repeat production job. We’ll work with you to find the best price without compromising lead time or quality.