How intelligently you can answer this question can determine how good of a price you can get for your Amazon FBA product. Let’s get the answers.
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Full Transcript:
Welcome to the GoodLife Warrior Podcast. I’m Yuping. We make sourcing easy, fun, and profitable for your business. This episode was originally aired as a video on my YouTube channel, youtube.com/goodlifewarrior. As always, high-quality professional sourcing content delivered to you with passion and my unique Chinese accent. Enjoy.
What is your target price so I can give you a quote? Did you ever get this question from your suppliers? I bet you did. What is your answer? I don’t know. Yeah, I really don’t know what is my target price. I don’t know how to answer this question.
How about I give you some awesome suggestions on how to answer this question so you’re not going to be perceived as someone who doesn’t know what you’re doing. After all, how you’re going to be perceived by your supplier is going to determine how good of a price they’re going to quote you. Let’s get started.
Just in case you’re new to this channel, welcome. My name is Yuping. This is the place to be if you’re wanting to learn the best in sourcing knowledge. After all, I have almost 20 years of sourcing experience and I’m still enjoying doing it. So welcome.
Back to our topic. What is your target price and how do you answer this question? First of all, what is your target price? Do you even know your target price? Why do you send the product to the supplier to quote then? You must have some idea. Right? So where is that idea?
In the training course, I always emphasize the students to do a solid landed cost analysis. Ideally, your worst-case scenario in your landed cost analysis should still make you money. If that’s the case, the cost in the worst-case scenario should be your target price to beat. Because every dollar improved upon that cost in the worst-case scenario is more profit. Right?
So the cost in the worst-case scenario should be your reference point or your target price. Now you’ll have an idea of your target price should you share this target price with your suppliers. Especially if they keep asking you, what is your target price, what’s your target price? No. Never be the first one to give out the number. Even though you know this number is your worst-case scenario is still going to make your money, the fact is you don’t know your supplier’s cost.
The supplier may be quotes you something that is even better. Then you end up leaving more profit on the table. Let me give you an example. Let’s say we wanted to sell this cup. You wanted to buy this cup, you ask, how much is this cup? I say you make an offer. You say five bucks. I say, okay. Here you go. Five bucks for this cup. You don’t know my cost for this cup is $2. You just left a $3 profit on the table without even negotiating.
So now you get it. You say, okay, I got it. I’m going to make a very aggressive offer so I don’t leave any profits on the table. When I asked you to make an offer, you said 50 cents. Now you just pissed me off because my cost is $2. I’m trying to make a profit. You just offered me 50 cents. You have no intention to buy and you don’t know what you’re doing. I’m not even interested in doing business with you. Do you see my point?
Never be the first one to give out the number. Because you don’t know what your supplier’s cost is. After you got the target price in your mind, and you know you’re not going to share that with your supplier, now let’s answer the question. What’s your target price?
My first awesome suggestion to you is, I wish I could tell you. Yes, that’s what you’re going to tell the supplier. I wish I could tell you. Here is the complete script. I’m so glad you asked. I wish I could tell you. But it’s our company’s strict policy not to disclose the target price to any suppliers during the quote process. If you are part of the training course, this makes complete sense. Because the RFQ package you’re sending out already indicated you are qualifying the suppliers. Right?
The second awesome suggestion to you is, you don’t want to know. Yes, that’s what you’re going to tell your supplier. You don’t want to know. When they ask you what’s your best price, you say… Here’s the complete script. We got some really aggressive target price in mind. You really don’t want to know. I suggest you put your best foot forward and send us your best quote.
The third awesome suggestion. It’s a little bit too late to ask. Just remember that. It’s a little bit too late to ask. And here is the script. When the supplier asks you what’s your target price, you just say, we got some really good quotes already. It’s a little bit too late to ask for a target price. I really suggest you send your quote in as soon as possible. We’re at the final stage of screening out the three best suppliers.
As I said before, how you answer this question, what’s your target price, is somewhat is going to determine how good of a quote you’re going to get. After you get some good initial quotes, there are two good follow-up questions that you can ask and can even help you get even better quotes. But I have to save the tips for the students in the course because they need to make more money.
Let’s recap quickly. What did we learn today? What’s your target price? In your mind, you should know that’s the cost in your worst-case scenario. Ideally, you should still be profitable in that worst-case scenario. And that is the cost you want to beat. Every dollar improved on top of that is additional profits.
And you should remember, never be the first one to disclose this cost target. Because you don’t know what the supplier cost is. And then you can use the scripts to answer the question, what’s your target price? If you want to take your sourcing game to another level, I think you should join the Sourcing Warrior Mastermind training program. I bet you’re going to learn a lot more, a lot faster, and make a lot more profits. Because all of these profits are hidden in the sourcing process. That’s it for today, my friend. I wish you have a very enjoyable day. I’ll see you in the next episode.
Check out the link, the Sourcing Warrior Mastermind link, undertake Sourcing Warrior’s quiz to find out your sourcing IQ. Make it fun, learn something, have a great day. I’ll see you in the next episode.
