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Thursday, January 09, 2014 8:35 PM

Deflationary Anecdotes From the Front Line; Simple Advice for Businesses

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In response to Monetary Tectonics: 50 Slides Illustrate Tug of War Between Inflation and Deflation I received an interesting email from reader "David" entitled "Deflationary Anecdotes From the Front Line"

Hello Mish

I have a small medical software development business in Ohio. We are tiny. With 25 employees we have no purchasing power.

Yet, in the past 6 months we have gotten huge discounts on our purchases, simply by asking.

1) Our garbage hauling contract came up. We shifted to a smaller container. Our existing supplier quoted us $120/month. A competitor came in at $50/month. Our existing hauler matched the price straight-away. We now pay $50/month. [That's a 58% reduction]

2) Postage: Our Pitney Bowes machine is at the end of the lease. We asked for a quote on a smaller machine. They quoted $125/month (plus consumable supplies and postage).  Their competitor came in with a similar machine and quoted $42/month. Pitney Bowes lowered their price to $98/month. Strangely PB didn't even try to convince us why their machines were better to justify paying 100% more.

3) Answering Service: We pay $130/month. A competitor approached us for $59/month.  Competitor offered us a free trial to test them to make sure they were good. 

It is shocking at the oversupply and lack of pricing power from our suppliers. Keep in mind we are a teensy tiny account so I can only imagine the deals we could negotiate if we were bigger.

There are a couple morals to this story.

  1. There is no pricing power in services
  2. Ask for discounts and you will get them

Simple Advice for Businesses

Anecdotes do not constitute "data" but the above email is from a very reliable reader. Thus, I highly suspect many discounts are available for those who simply ask.

So ask!

Mike "Mish" Shedlock

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