Of course there is a need for some moderation here. It is not a good idea to be stuck with lots of unsold inventory. The smaller you keep your inventory, the better off you'll be in the long run. You have to find the proper balance for your business between volume orders and small inventory. 

Always Know the Competitors' Prices  

Before talking to your supplier, you should do some comparison shopping with all the competitors. If you know exactly what someone else is charging for the item you want, you can get your supplier to at least match that price or even beat it. When your supplier knows that you've done your homework, he won't be able to quote any prices that are too high. 

In your price comparisons, be careful of unrealistic prices. The rule is that if something seems unreasonably priced, it probably is. Some products will be incredibly inexpensive due to the fact they are out of stock or refurbished, or because there is an unrealistically high shipping charge. 

For an out of stock product, the supplier may be selling it below his cost just to get rid of the product. In this case, you should be asking why the product is being discontinued. Maybe there is no market for the product, in which case you probably don't want to get involved in marketing it. 

If the product is refurbished, it means it had some original defect and has been repaired by the manufacturer so that it's almost as good as new. Even though it may operate fine, there are laws about not charging full price for refurbished products. If you are buying for yourself, this is a way to get good deals. If you are buying to resell, you may want to reconsider having to sell something that started out with a defect. 

Finally, a supplier may be charging an extremely low price for a product, but then adding a huge shipping charge. This is often done just so the price seems low at first to the customer. You should become familiar with the actual shipping costs of any item based on its weight. If you have a good idea of how much an item should actually cost, you can tell a supplier that his shipping charge is out of line, if it's too high. In general, anything under 20 pounds can be shipped anywhere in the U.S. for less than $15. 

Establish Credit as Soon as You Can  

Obviously, having credit with a supplier can help your cash flow tremendously. The best way to establish credit is to give the supplier several orders with cash payment. After he has seen several orders from you, he will gain some confidence in you. Then you can ask for a credit on a small order. When he lets you have credit, be sure to pay promptly. If you delay on even one payment, the supplier will start to become suspicious and may take away this service. 

Establishing credit with your supplier is also useful in building your credit rating. It will be easier and easier to establish credit with new suppliers once you've already established credit with one or two. A great opportunity to establish some credit without any previous experience exists with National Wholesale Company. They are offering a partial credit line to anyone without doing a credit check. All you need to do is to fill out the order form at the end of this book. This is a great way for you to establish a credit history very quickly.  

Conclusion  

Never underestimate the power of cost reduction in increasing your profit. Even a 10% reduction can give a huge boost to the profits. Always look around for better prices, and always maintain the best relations with your suppliers. Following all these simple guidelines will guarantee you the lowest prices on anything you need to purchase.