MBA1622 How To Negotiate Any Big Expense + Free Ride Friday

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Hey O. Welcome to the $100 MBA show. Because business never stops. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's episode you will learn how to negotiate any big expense in any business. We have expenses and some of those expenses are quite large if you're looking to save some money, especially during a tight time like this one. For many people the easiest expenses to save money on are the big ones. They're the ones where you can negotiate and get a better deal and actually build upon the relationship you have with that expense, that vendor that, that company that is charging you. But how do you do this? How do you actually negotiate a better price? What do you say exactly? Well, that's what we cover in today's episode. So let's get into it. Let's get down to business. Let's jump right into today's lesson and make sure we know how to negotiate those big expenses. So first let's identify what are our big expenses are. So you got to take a look at your P and L. If you don't have a profit loss sheet, then you should have one. This is a simple, simple Google sheet or Excel sheet where you just list all the things you spend your money on for your business. That's the expenses, the loss sheet and the profits are of course your revenue. Another quick and dirty way to do this while you're creating your P and L is to take a look at your bank account, where your money is going when it comes to the expenses of your business. For the moment, we're going to put aside any payroll, any employees that work directly for you because that's something that you've agreed upon. And we don't want to give somebody something that they didn't expect. Right. They have an expectation. You want to make sure you pay them what they're worth. The exception this are contractors or service providers. Maybe you're outsourcing your marketing or your paid advertising and you have a firm that's doing this for you. You could definitely negotiate that and you can use the techniques I talk about today. So what other big expenses do you have? Do you have server costs? Do you have website maintenance? Do you have suppliers? Do you have rent that's costing you a lot of money? Equipment? What is it? I want you to list the top five big expenses and have them handy. If you're spending a lot of money or paying a company a certain amount of money every single month, there's a good chance you're a high volume customer, you are actually consuming their service or product at a high rate and you're a customer they don't want to lose. They want to do everything they can to keep you happy and keep you paying. So you have a bit of leverage here when it comes to negotiating a better rate. One of the easiest ways to negotiate a better rate is, is to commit to a longer term. So for example, we have server costs to run our software company. We pay Amazon Web Services thousands and thousands of dollars every single month. Literally hundreds of thousands of dollars every year. So one of the things that we do is we negotiate a better rate with Amazon. We say to them, we're not going anywhere, we want to commit to you. We will commit to a year in advance. Now, it doesn't mean you have to pay everything up front, it just means that you're locked into a contract where you're not going to move off their platform. It's not pay as you go anymore. You're going to lock in in exchange for a better rate. So you're paying less every month, you lose the flexibility of the possibility of leaving the platform. But if you're paying that kind of money, it's probably going to be a hassle for you to leave anyway. Commit to a longer term. A year, two year contracts even are available for a lot of types of companies and suppliers. Call them up, find your account manager and say, hey, we want to negotiate a better rate. And even if you save 10, 15%, that makes a humongous difference on your bottom line in terms of what you spend every year. So negotiation tactic number one is you need to negotiate a better rate if you commit to a longer term. Another negotiation tactic is that you commit to more volume. For example, I was coaching a client a few years ago who their app has SMS reminders and they have a supplier that allows them to send x amount of SMSs every single month. Well, they committed to a higher volume SMSs knowing that they'll have more customers. Before they were kind of on a lower plan, they're paying per SMS after a certain rate. So they said, hey, instead of us on this lower plan and we pay per SMS after we hit our limits, how about we say we're going to pay for 1000 SMS a month instead of the 20 or 30 plan. So every month, no matter what, we'll pay for a thousand SMSs. And that was kind of the number of SMSs they were using every month anyway. But they commit more volume up front every month and therefore they can negotiate a better rate. Another way to save money on a big expense is to make sure that you're actually being billed in your local currency. I know this sounds very simple, but the currency exchange rate and the international fee that your bank might be charging you could be astronomical because of the volume, because of the number that you're being charged, you know, the price itself. So for example, if you're doing business with a UK company and they're charging you British pounds every time they charge you, they're converting that British pound amount to your local currency. It's a really bad rate for the most part where you're losing money on the exchange and your bank will charge you an exchange or a foreign transaction fee. So this can get expensive. You can call this company up and say, hey, can you charge me in my local currency? Basically, you agree on what that is. Of course, currencies will fluctuate, so they might give you an exchange rate that's not super favorable, but fair, which means you know exactly how much you're going to pay every single month, regardless of what the markets are doing, whatever foreign exchanges are doing, and there's no international transaction fee saving you some money. Another way that a lot of people just overlook when it comes to negotiating a better rate for your expenses is to literally email them, call them and ask. Sometimes all you need to do is ask. They have a promotion going on. They have something for loyal customers. They have a protocol internally for anybody. Anybody asks to negotiate a better rate or they're thinking about leaving to hit them with this discount like a standard discount that they have internally. So just go ahead and ask them, hey. And this is literally what you could say to them. Hey, I've been working with you guys for X amount of years. I've been spending X amount of money every single year. I'm looking to lower my expenses. I do not want to leave you for the competition. What can you do for me? What kind of discount can you give me? That simple, straight up and just tell them, ask for the discount. Whenever I've tried this technique, more times than not, I've been given some sort of discount. Whether it's 5 or 10 or 15%, I walk away saving money. It costs the company a lot of money to acquire you in the first place. To acquire a new customer. They don't want to go through that expense again. They don't lose your business. They don't want to have churn. So what they want to do is keep you, even if it means earning a little bit less through a discount. But you don't get what you don't ask for. You got to ask. You got to ask for the discount. Here's another way to negotiate a better rate. Before you sign up for a company, I'm talking about expenses you haven't occurred yet. So before you sign up for a company or a vendor or a supplier, have their prices that they publish or they have quoted you alongside other prices that you have gathered from their competitors and flat out say, I'm shopping around, can you match this price? Can you match the price that I was given by this company? If you can, I'll go with you. That's a very easy yes for a company. Yes, we want it to earn your business. And for the most part they can match that price or at least come close, meet you halfway. That way you're not spending money that you don't need at the start. Before you even get into this relationship, negotiate before you sign on the dotted line and ask, hey, can you match this price? We'd love to go with you guys, but we're on the fence because the competition offered us this price. Can you match this price? Worst case scenario, again, they're going to come to you and say to you, hey, we want to earn your business. Maybe we can't hit that price. If we can hit this price, that second price is going to be lower than what they quoted you. Saving you money, gas, snacks, tolls. This trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.

Tuxt and data detour to Metro.

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Lesson, you have to have to negotiate. Negotiation is part of business. Use the techniques I talked about today. These are very simple techniques, very easy ins for you to just be able to ask this company for money or ask them for a discount. The thing I love about this is that it's a win win. These people that are charging you every month want to keep your business. You want to keep using them. They help you run your business. If you can negotiate that better rate, that's better for you. What's awesome is that the longer you're in business, the longer you're in a relationship with a company that's helping you out, the easier it is to negotiate the rate. But please explore negotiating better rates, at least at an annual basis. Annual basis is a good cadence that wraps up today's lesson. But today's episode's not over. It's free Ride Friday. Let's see who won this week's free ride. And the winner is Eldman, 32. Eldman, 32 says great lessons, even for employees. Five stars. I'm not a business owner, but I started listening because I got that itch and that itch got me hooked to the show. There are great lessons, and not just lessons on business, but also on leadership. This show has been great value. Thank you, Elman, 32, for the great review. Your mission is to email me over at omar00mba net so I can hook you up with a lifetime membership to Easy course. You won our free ride. If you want to win a free ride just like Elman did, just go ahead and leave us an itunes rating and review. You enter our weekly random draw and until you win, you're in the draw every week. So go ahead and drop that review right now. It takes two seconds, so just go ahead and do that. Listen in on Friday to see if you won. It's our way to say thanks for showing us love on itunes. Before I go, I want to leave you with this. If you feel uncomfortable asking for discounts for negotiating rates, talking to vendors, see this as a great exercise to get out of your comfort zone and do things that stretch you a little bit. My buddy, Noah KAGAN. If you YouTube coffee challenge Noah Kagan, he has a small, simple baby step of an exercise you can do to get yourself used to this, which is literally just to ask for a discount at a coffee shop, watch that video and you'll check it out. You know what I'm talking about. It's a great little exercise to get you into this mode. Thank you so much for listening and I'll check you in Monday's episode. I'll see you then. Take care. Of. Gas, snacks, tolls. This trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.

Text and data detour to Metro.

Get that more for your money feeling only at Metro by T Mobile Just bring your number $30 first month and $25 after with autopay not available. If with Metro T Mobile in the past 180 days.