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EP27: Q&A Session: FOB Pricing And Dealing With Sample Costs.

February 13, 2020

Warning the following podcast has been classified
as insanely lucrative listener discretion is advised almost all the suppliers that you
deal with are going to quote you FOB pricing and that’s just them saying hey look we’ll
manufacture this stuff and get it get it ready and we’ll actually get it to the boat your
attention please listening to the am/pm podcast may cause recurring revenue streams and unfair
unfair advantages over your competitors other side effects may include fatter wallets fired
bosses and longer vacations listen at your own risk here’s your host seven-figure entrepreneur
and online marketing madman Manny Coats hello everybody and welcome to the am/pm podcast
my name is Manny Coats and I will be your host this is the show where we discuss how
to generate recurring revenue streams that come in 24 hours per day during the a.m. and
the p.m. morning or night hence the name of the show as a matter of fact I was out having
an ice cream with my girlfriend and while I was having some ice cream I was making money
how cool is that pretty cool I think hello guys welcome to another Q&A I am here with
my super awesome buddy Guillermo Puyol how are you doing Gui I’m doing funtabulous today
Manny excellent excellent so we always now as of yesterday do two questions per Q&A we’re
trying to keep it short and focused and just awesome so I imagine you have picked out two
fantastic questions for me I have two questions you want to go ahead and jump in what what
do you mean jump in here’s the thing we are gonna focus this thing stop the rumbling on
and just keep people a lot of value are you good with that yes I am very good with that
let’s do this two questions start the first one tell me what this guy has to say it’s
actually a lady Oh a lady Amanda Peterson now she’s saying I’m getting pricing from
suppliers in china and many of them are giving me a price with the word FOB after it what
does FOB mean so this one’s actually uh one thats very near and dear to me because I am
an FOB or I used to be FOB is fresh of the boat right no Gui stop right there it’s not
fresh off the boat quit confusing people yeah okay well actually technically you’re correct
i guess and you are one hundred percent correct and that you are fresh off the boat for sure
but that’s not what we’re talking about FOB ladies and gentlemen forget about what he
said it’s an acronym and that means Freight on Board sometimes free on board you got that
Gui nothing’s fresh on the boat oh that’s that’s no that’s you come on so what we’re
getting you uh up to speed though alright so Freight on Board that is essentially true
now you may be forget the question well it was a what doe FOB mean so FOB essentially
Freight on Board what’s that what that means is all the suppliers almost all the suppliers
that you deal with are going to quote you FOB pricing and that’s just them saying hey
look we’ll manufacture this stuff and get it get it ready and we’ll actually get it
to the boat at that point its your responsibility to actually cover the freight costs and and
all that all the additional costs to get it out to wherever the destination might be lets
say it’s in the u.s. to get it to the port and then from the port to wherever it is you
know right to that to your place of business or the amazon warehouses so when i was first
doing this i actually thought oh FOB that means you know i forgot what i thought it
stood for the actual acronym but i thought that was the full the final cost to actually
get it here to the US so not the case okay so that’s just to get it over there to their
shipping facility there anyways and jokes aside its super important to whenever you’re
doing your your calculations and see whether the products can have the margins to run the
calculations on landed cost so everything not FOB but actually figuring the shipping
cost to get it to the U.S. or you’re gonna be way off and and of course they want to
quote you FOB because it’s gonna be a lower number but you have to have to figure out
the shipping costs yeah and and we’ve said this a million times now both on the facebook
group and I actually I said it on the Periscope as well but when you’re shipping via boat
but by sea shipping you save so much money right your cost per unit goes way down right
instead of paying let’s say five dollars per unit in fact I just did this one of my one
of my products I have to get it over here really quickly because I’m really low on inventory
right so I have to do it by Express air because that’ll that will get it here in about a week
but my cost per unit for shipping at that point is between five and six dollars on that
particular product if I sent it by boat it’s like just over a dollar it’s under two dollars
so I save a lot especially if I’m dealing with like 4,000 units think about that if
I’m saving three dollars per unit alright that’s twelve thousand dollars i save just
on shipping that’s money that’s essentially pulled out of my pocket I’ve lost it I’ve
just blown it away yeah you can easily turn around and spend the money in pay-per-click
advertisement and there’s so much you can do with with those with those savings yeah
and we just talked about that in the was it the last podcast that’s posted for the launch
strategy that it may have been the one before that I’m not exactly sure but they’re all
worth listening to so yeah it basically in a nutshell the strategy is that if you can
cut down your cost for shipping let’s say you can save three dollars per unit over your
competitor then that’s three dollars per unit that you can use to advertise on pay-per-click
to outrank them to get up to the top of page one with with your ad get people to buy when
they’re buying with those keywords it’s pushing you up the the ranks organically right so
there’s a whole whole podcast episode on that go check it out at sweet so
we also have a second question Manny this one is from Julie all right to a few ladies
this time huh yeah so in this one she says hi Manny I have listened to all of your podcasts
and i’m a member of your facebook group thanks so much for putting out an amazing content
I am not yet selling but I’m about to order samples the prices are pretty high for example
my product will cost me about five dollars when I buy it in bulk but to get one sample
the price is thirty dollars plus another twenty-five dollars for shipping that’s fifty dollars
or it should be $55 for what will cost five dollars if I choose to move forward should
I negotiate down the price of the samples okay that’s a good question it’s one that
a lot of people ask it’s something that I dealt with I think everybody deals with this
when they first start out so let me first talk about how alibaba works and they’ve changed
this I’ve been dealing with Alibaba now for forever back in the day way back in the day
when I was running one of our online companies we had 50 employees that covered the entire
floor of a building it was a long distance from my office like to the other side so we
ended up ordering all these electric scooters right and we would take these electric scooters
and run them through the halls and stuff to get we’re just lazy you know just to get from
one side to the other and where did we get these scooters because the scooters were all
kind of brand new at the time it was kind of like the rage kind of like those hover
board things are right now and we went to Alibaba and we ended up getting you know just
a ton of them shipped over on a boat filled up a portion of a container and gave them
to all the employees in the office it was pretty fun but I’m getting off subject here
the the thing about Alibaba back then and how it’s different now is back then you could
actually go and you could order one unit and you can get it at cost right at the if they’re
selling it for let’s say it’s a 100-dollar scooter and they’re selling it to you at $25
you can in when you could buy one scooter at $25 plus the cost to ship it out yeah is
it similar to what Aliexpress is now right exactly but now Alibaba is the suppliers you
know they’ve caught on to this they know that there’s a lot of people out there that are
they’re tire kickers they’re not really interested in being a you know a serious buyer and they
go in to try to buy one product for cheap you know to get a discount on so they don’t
have to go and buy it retail somewhere here in the U.S. so what the suppliers are doing
is they actually sell the product if you’re for samples typically at the normal price
not the retail price not the price you’re going to get as a as a buyer in bulk so for
example in her case in Julie’s case she said the product was five dollars and they want
to sell it to her for 30 well that’s probably the retail price i’m assuming thirty dollars
that’s just normal that’s just the way it is the twenty-five dollars for the shipping
guys that’s just a cost of doing business that’s just the way it is it’s normal I don’t
think that’s anything really crazy for all the things that I’ve ordered anywhere from
twenty to forty dollars in shipping is typically what I see it’s just I don’t think they’re
trying to make a profit on that it’s just a cost and the same thing with the you know
the thirty dollars for the product you just have to do it it’s a cost of doing business
so let me give you a couple strategies though if you’re dealing with a supplier and that
supplier has multiple variations of that product and you’re not quite sure yet which one you
want right you’re ordering a widget and they’ve got you know three different kinds of widgets
you can actually ask ask them to ship all three of them to you and then usually the
price per unit will come way down okay because now you’re ordering multiple units the shipping
costs will definitely come down actually the shipping costs will go up but the the cost
per unit goes down because they’re they’re shipping it all together so that’s one thing
I do is I try to order as many units at one time as I can from the supplier so that I
can look at all those samples and see what I want the second thing is that I always tell
them hey if we decide to go into business together right if i’m going to start ordering
products from you i like the samples everything’s good and i start buying from you i want you
to take the sample costs that i’m paying for right now and I want you to deduct it from
my actual first order okay and almost every time they’ll agree to that if not then I don’t
they might be a little shady they might not be a very big supplier but that’s what I do
so the cost itself typically gets reimbursed it’s not a big deal when those samples make
great white elephant … right exactly you know because you’ve been over to my place
yeah boxes and boxes of stuff right yeah and it’s like yeah when Christmas comes around
and there’s a white elephant I’m I’m loaded I’m ready to go for sure I’ve got tons of
stuff alright so she so she was asking about the if it was normal did I miss anything else
was our second part of the question I don’t think there was right oh she wondered if she
could negotiate the price down okay so yes go ahead and try I mean it doesn’t hurt to
try they’re probably going to say no or they might come back and say you know okay well
we’ll drop it ten dollars you’re talking about minimal amounts right this is not a hobby
this is a business so you know if they say well instead of thirty dollars will give it
to you for twenty-five dollars I guess you just saved five bucks but if you’re going
back and forth on email all day trying to negotiate five bucks is it really worth your
time you know consider it just a cost of doing business there are certain fees that you’re
just going to have to eat when you first start out so I wouldn’t worry about it it’s pretty
normal don’t freak out when you see a $25 cost they’re sending it by Express air so
you’re getting it fast and it just it’s expensive and I think Julie your time is going to be
better spent negotiating the cost to source so once you make the determination that you
do in fact want to source the product then by all means negotiate as much as you can
because twenty cents could make a huge difference if you’re saying selling thousands of units
a month so that’s that’s the time to really negotiate the samples not so much right I
totally agree cool so that’s all we have Manny unless there’s something else you want to
add we are all done no I mentioned it in the last Q&A I’m now doing Periscope I didn’t
want to do Periscope so for those of you that are actually enjoying Periscope you can you
have Gui to thank for that Gui’s like Manny you gotta do Periscope so I’m on there and
it’s really cool you know I get on there with everybody and the last one we did we had a
total of 137 people I was interacting with and asking questions and you know it was in
the evening I was having some wine outside was it was cool man we we answered a lot of
questions so go over to Periscope and you know get the app for your your phone and get
on there do a search for Manny Coats you’ll see me and just follow me yeah or you can
go to and there’s a link to the Periscope channel right on the side bar
so you can find Manny that way yeah and also join us on our facebook group we’re posting
daily there’s always awesome stuff there so again there’s a link to our
facebook group Gui goes in there and approves all the cool people are you a cool person
we’ll find out so go there and apply it’s awesome cool all right Manny all right I think
that’s about it guys thank you for spending a little bit of time with us till next time
my name is Manny Coats I’m Guillermo Puyol see you guys bye bye you’ve been listening
to the am/pm podcast hosted by Manny Coats for more information insider tools and to
get the resources mentioned in this episode visit

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