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”
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.
- There is no pricing power in services
- 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.
Mike “Mish” Shedlock