Small Business Taxes & Management
Saving on Consumables
Small Business Taxes & ManagementTM--Copyright 2009, A/N Group, Inc.
Office and shipping supplies can add up to a tidy sum, even for a modest office, but you can achieve substantial savings (upwards of 40%) by doing some careful shopping. Larger savings are possible if you really want to get aggressive. Here are some ideas.
- If you're lazy, concentrate your efforts in shopping for consumables (staples, copy paper, toner cartridges) or other items you purchase regularly and have a higher per unit cost by looking for a supplier with consistently low prices. Then, stick with the supplier, and only comparison shop every six months or so.
- But you can do better. Chances are no one supplier has the best price for everything. For example, even though there are several office superstores in our area, we found that adding machine tape was cheapest on line, despite a shipping charge.
- Don't overlook any source. We know of a local print shop that buys its envelopes from a warehouse club because their prices are actually less than their regular paper supplier. You may be surprised that the wholesale clubs or other sources may have name-brand cartridges or other supplies, and at substantial savings
- Brand names versus no-names. Decide when to buy quality; when to go cheap. Off-brand paper clips should do just fine. On the other hand, cheap shipping tape may not be a bargain if it's tough to work with. For items you use in bulk, savings with an off-brand can be substantial, but try before you buy in quantity. For one-shot items or the occasional purchase (e.g., stapler), the name brand may make more sense. What about cheap toner and ink cartridges? If you've got an expensive machine, under a maintenance contract, you should probably stick to the manufacturer's recommendation. On the other hand, if you've got a $200 copy machine, the cost of two brand-name toner cartridges is probably equal to the cost of the machine. Using off-brand cartridges may not be much of a monetary risk.
- There are degrees of quality. Buying the top-of-the-line versus mid-grade from the same manufacturer may not make sense. The higher price may be more added margin to the manufacturer or dealer than added quality for you. Or the price may reflect features you don't need. For invoices, internal documents, etc. you don't need the best and brightest paper. Save that for product literature, handouts to customers, etc.
- Some items seem to sprout legs in the supply closet. You know pens will be taken home. Rather than having a fit, buy cheap. There may be a side benefit. Employees may be less inclined to walk off with the cheap ones. (Better yet, lock the supply closet or otherwise restrict access.)
- Catalog shopping can be attractive, particularly if there isn't much competition or there aren't any office superstores in your area. But read the fine print. Are you buying a name brand or the house brand? What quantity is necessary to get the price? Is there a minimum order or a charge for small orders? And don't forget to add in shipping. Finally, do some mental arithmetic. Using a catalog means you can call in the order and have it delivered. Compare that with the salary and travel cost of sending someone to the store.
- Join a co-op or start your own. There are office co-ops in some areas. If you don't have one in town or nearby, talk to a couple of other business owners. Instead of a formal co-op, you can pool orders so you can order 50 cases of paper and get a better price instead of each business ordering 5 cases at a time.
- Consider a co-op for services. While it probably doesn't make sense for low volume or one-shot work, it can if several local businesses need the service on a regular basis. For example, about once a month you need a shrink wrap machine. While they aren't expensive, it's an item that can be shared.
- Quantity discounts on some items can start at small volumes. For example, one toner cartridge may be $100; 5 or more may be $90. If one will last you several months, it may not make sense to order five. That's even more true if the machine is on its last legs. But if you're a heavy user, the quantity discount makes more sense. You can save more money by buying copiers, printers, or other equipment that uses the same supplies. There are at least two advantages. The first is that you need to stock less overall. For example, if you have five machines, each using a different cartridge, just to have one backup for each machine you'll have to stock five cartridges. But if all the machines use the same cartridge, having just one cartridge provides a margin of safety. (Although you'll probably want to keep more on hand.) The second reason is that it now makes more sense to reach for the volume discount. You'll go through the cartridges faster and, should one or more machines fail, you'll still be able to use the cartridges for the other machines. A third, bonus reason. If you've got someone around the office who's handy, you might even be able to fix a machine by cannibalizing parts from a failed one.
- Rebate or price cut? In general, go for the lower price. Completing the rebate application takes time and the retailer is betting you won't cash it--and they may be right. Worse yet is a rewards program that you're unlikely to take advantage of. And two for the price of one only makes sense if you're sure you'll use the second. There are plenty of stories about businesses or individuals who bought one, got two, and lost the second one. Same with quantity discounts. That's an individual call. In some cases it's clear you'll use the second one, and soon.
Copyright 2009 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
--Last Update 06/19/09