I sat in on an exchange between two very experienced businessmen today. What an education in five minutes. The Salesman and the Entrepreneur.
Entrepreneur: We bought these from you last time at $1.62. Why do you want $2.25?
Salesman: I have to pay MGM an 18% royalty on these.
Entrepreneur (grabs a calculator): $1.62 +18% (+10% for safety) that’s $2.10. How many have you got?
Salesman: I’ve got 20,000 now and another 15,000 on the water.
Entrepreneur: I’ll take the lot over 3 months and pay you slowly. I don’t want them showing up at my competitors. They’ll kill the market.
Salesman: Ok, deal.
I spoke to the Entrepreneur after. He was happy to get the product at a price he can move the stock. You make your profit when you buy and just collect it when you sell. But you don’t have to screw your supplier. The Salesman knows he’s got a reliable sale. Win-win all round. But the whole deal was concluded in 10 minutes.