Double Your Profit Day #22 Stop Overpaying Vendors Today With This Trick! - Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

Summary4 min read

Podcast Summary:

Owned and Operated – Double Your Profit Day #22: Stop Overpaying Vendors Today With This Trick!
Host: John Wilson
Date: August 22, 2025

Episode Overview

In this episode of “Double Your Profit” from the Owned and Operated podcast, John Wilson focuses on a practical, often-overlooked strategy for boosting home service business profitability: negotiating with vendors. With a direct, actionable approach, John shares how any business—regardless of size—can cut significant costs by actively managing and renegotiating vendor relationships, ultimately driving more profit to the bottom line.

Key Discussion Points & Insights

Why Vendor Negotiation Matters

Quickest Path to Savings: John opens by identifying vendor spend as the “easiest place to find 10% savings” in many businesses ([00:13]).
Routine Oversight: Many even “big businesses…don’t negotiate purchasing nearly as often as they should” ([00:25]), leaving money on the table.

Building Productive Vendor Relationships

Mutual Accountability: “We have great relationships with our vendors, but we do regularly bid accounts and we do hold them accountable to what we’re looking for in a partner, just like they hold us accountable…” ([00:30]).
Clarity is Key: Have a clear list of priorities before entering negotiations (e.g., on-time deliveries, consignment stock, strong payment terms).

Cost Controls & Category Reviews

Regular Price Audits: Review major cost categories every 3-6 months, including HVAC equipment, generators, water heaters, and pipe/fittings ([01:13]).
Works for All Sizes: Smaller businesses have “a lot of sway” too, and “small businesses become big businesses” through these habits ([01:35]).

Setting the Right Expectations

Defined Needs: “You walk in and you look for what you want…deliveries on time, vendor managed inventory, consignment inside the warehouse…” ([01:52]).
Delivery Options: Modern vendors can support multi-day deliveries or even station stock in your warehouse.

Negotiating Strong Payment Terms

Terms Matter: Understand “how many days do I have to pay, what do I get if I pay early, and how can I pay?” ([02:25]).
Prepayment Discounts: “Just because you have 60 days doesn’t mean you need to pay in 60 days. You could pay at earlier frequencies and get a hold of those discounts.” ([02:37]).

Negotiation Tactics

Separate the Negotiator: “Whoever’s regularly doing the buying should not be the one negotiating…you need a bad guy” ([02:53]).
Bid Multiple Vendors: Collect 3–4 vendors for quotes, set meetings and “hard deadlines. Time kills deals.” ([03:16])
Benchmarking: “One of the most important things that I have found inside negotiation is understanding what is possible.” ([03:30])
- Ask peers and use public resources (like ChatGPT) to find market rates.

John’s Real-World Example: Uniform Negotiation

Problem: Uniform rentals were costing ~$0.50 per shirt ([03:47]).
Solution: After checking peer rates and querying ChatGPT, John discovered industry rates as low as $0.18–$0.20.
Result: “So I walked in and I told them that I wanted to see 18 cents and we got 18 cents. So we got a 60% price reduction because I benchmarked it…” ([04:15]).

The Power of Volume

Promise Volume: “Volume is key. When you’re working through these conversations, you want to be able to promise volume because that’s going to drive some of the additional urgency.” ([04:42])
Real Numbers: Even with fluctuating orders, giving vendors an average (e.g., $70k–80k/month) lets you leverage scale for better deals.

Closing Thoughts

Low-Effort, High-Impact: “Vendor negotiations are extremely powerful. They’re an incredible way to drive profit to your P&L without impacting anything else inside the business.” ([05:10])
Repurpose Spend: You’re already buying these things—insist on better terms for the “exact things I’m already doing” ([05:20]).

Notable Quotes & Memorable Moments

“If you absolutely had to…save 10%, what is the easiest place to find 10%? …Vendors.” — John Wilson ([00:12])
“Whoever’s regularly doing the buying should not be the one negotiating…you need a bad guy.” — John Wilson ([02:53])
“Time kills deals. And if there’s no urgency, you are not going to receive urgency from the person you’re negotiating with.” ([03:19])
“I walked in and I told them that I wanted to see 18 cents and we got 18 cents.” ([04:15])
“Vendor negotiations are extremely powerful. They’re an incredible way to drive profit to your P&L without impacting anything else inside the business.” ([05:10])

Key Timestamps

00:12 – Easiest path to 10% savings: vendors
01:13 – Reviewing cost structure every 3-6 months
02:25 – Understanding and pushing for favorable payment terms
02:53 – Negotiation tips: separate the buyer from the negotiator
03:16 – Collecting multiple bids and setting deadlines
03:47 – Uniform negotiation: benchmarking and saving 60%
04:42 – Volume commitments and their importance
05:10 – The power of vendor negotiations for profit

Conclusion

John Wilson’s episode delivers a blueprint for any home service business looking to double profit margins by smart, disciplined vendor negotiation. From dissecting payment terms and bidding multiple vendors, to leveraging technology and volume for benchmarking, John’s actionable steps demonstrate immediate, low-risk ways to save. His advice is clear: Don’t leave profit on the table—own your vendor relationships and drive the best deals possible with intention and regularity.

Loading summary

Transcript1 lines

[00:00]
A
Welcome back to Double your profit. I hope you're enjoying our series so far today. What we're talking about is vendor negotiations. If you absolutely had to gun to your head, save 10%, what is the easiest place to find? 10%, probably from the title, should be vendors. Vendors are going to be the simplest way to save money. And I've talked to people that are big businesses that don't negotiate purchasing nearly as often as they should. We have great relationships with our vendors, but we do regularly bid accounts and we do hold them accountable to what we're looking for in a partner, just like they hold us accountable to the same. Are we paying on time? Are we buying the volume that we said we would buy and for them same back and then are we getting the prices that make sense for us? You are in the business of profit and in order to do that you need cost efficient materials delivered on time with terms that make sense. So let's hit those three cost efficient materials every three to six months, depending on the item. We are reviewing the cost structure for four categories. So what's our H vac equipment, what's our generators, water heaters, pipe and fittings. And we're reviewing this by category to make sure that they are in line with what we expect. Now this does help when you start moving a lot of volume. But even smaller businesses can have a lot of sway. Small businesses become big businesses. So what you're looking for is a partner. But you need to know what you're looking for on the way. You walk in and you look for what you want. I need deliveries on time or I need vendor managed or I need consignment inside my warehouse. So that way it's easier for us to get parts. A lot of our vendors have turned into vmi, which means that they have a location inside our warehouse or they offer one, two or three times a day deliveries in order to keep us stocked and moving. The final thing that's pretty helpful here is terms. What terms means is what do the payment terms look like? How many days do I have to pay? What do I get if I pay early and how can I pay? We also push hard on prepaid discounts. Just because you have 60 days doesn't mean you need to pay in 60 days. You could pay at earlier frequencies and get a hold of those discounts. Now some tips on negotiation with suppliers. Whoever's regularly doing the buying should not be the one negotiating because the reality is you need a bad guy. You need someone who's going to come in and ask for what you want, regardless of current relationship. When you decide you're going to bid an account, you want to collect three to four different vendors. Decide on what you want out of that relationship. Set meetings and set hard deadlines. Time kills deals. And if there's no urgency, you are not going to receive urgency from the person you're negotiating with. One of the most important things that I have found inside negotiation is understanding what is possible. You want to find out what is the lowest that someone can offer this thing you want to. Uniforms for US is about $150,000 a year line item. So we are looking for ways to make that better. But I didn't really have a good sense of what shirts cost. So what I did was I called a couple friends, I said, hey, what are you paying for your shirts? Then I went to Chat GPT and I asked the same thing. Hey, what is the lowest recorded price for a Cintas shirt rental? And they told me it was like 18 cents or 15 cents or 20 cents. It was something like that. The first quote we got was 50 cents. I mean, that's a big difference. Like, I don't know if Chat GPT is lying or whatever, but, like, that's a really big difference. So I walked in and I told them that I wanted to see 18 cents and we got 18 cents. So we got a 60% price reduction because I benchmarked it against what other people were getting asked. Chat GPT and I tried to understand the dynamic of the level of account that we were bringing to them. And then I just asked for it and we got it. My final note on vendor negotiations is volume is key. When you're working through these conversations, you want to be able to promise volume because that's going to drive some of the additional urgency. I don't know if I'm going to buy $50,000 of parts for this department or $100,000 of parts for this department in any given month. But on average, 70 to 80, just between the two of them is where I'm going to land. But you want to be able to promise volume because that's going to get them more excited to work with you deeper. So vendor negotiations are extremely powerful. They're an incredible way to drive profit to your P and L without impacting anything else inside the business. You are already paying these suppliers and you are already buying these things, and you're just saying, hey, I want better for the exact things I'm already doing. And that's what makes this the easiest way to drive additional profit to your bottom line. Make sure you like and submit.