Brokering the Best Deal
HOW TO NEGOTIATE A PRICE THAT GIVES YOU THE BIGGEST BANG FOR YOUR BUCK.
By Amy Boone
aving learned how to determine your club's fitness equipment needs (see the January issue of IDEA Fitness Manager), you are now in a position to negotiate a deal with the manufacturer that will best suit the needs of your staff and club members. Many fitness facilities use only preferred manufacturers with whom they have established pricing, financing terms and service contracts. However, if this is not the case at your club and your options are open, here are some factors to consider when finalizing your equipment purchase.
most frequently repair and what their personal experience reveals about manufacturers' typical response times and the quality of specific equipment lines. Many manufacturers now offer showroom tours to prospective buyers, and most have expanded their websites to feature all product details and specifications. They want you to interview their satisfied clients, get referrals and try the equipment. Most important, they want you to develop a sustaining and mutually beneficial relationship with your account representative.
Negotiate the Sale Shop Around
Our members sometimes take months to decide on a health club before investing in a membership. They visit different clubs and get rates; they check out our websites; they ask friends about their experiences; they request a "free trial"; and they try to determine whether they like our trainers and staff. Fitness directors would do well to use these same tactics when purchasing fitness equipment. In a nutshell, you should invest in quality; proven reliability; and brand recognition. Research different brands of equipment online, and read trade magazines to see how the brands have fared in product testing. If you have concerns about the integrity of a particular piece of equipment, discuss these with the manufacturer's account representative and see what, if anything, has been done to improve the product. You also need to evaluate any equipment you select for durability, cost of replacement parts and required maintenance. In addition to researching trade magazines, you can evaluate your choices by asking independent service providers which equipment models they Many factors can affect the pricing of fitness equipment. First, the size of your company probably has the greatest impact on the price point you can negotiate. Companies that will be purchasing for multiple sites on a year-round basis are usually offered the lowest rates. In fact, single-site clubs can't always purchase directly from a manufacturer and need to rely on a middleman, such as a retail store. This middle party can come between you and your best price. Second, the more equipment you order in one purchase, the lower your cost will be. For instance, your company can save thousands of dollars by buying 10 machines from a single manufacturer rather than purchasing those same machines from two or three different manufacturers. However, that may mean having to give up one or two features you want in an ideal leg press machine in order to stick with one manufacturer. But the upside to this small sacrifice is that it will leave you with spare money for other club purchases or allow you to buy another machine with the cash you save. The third factor that greatly impacts your pricing is the payment option you select. With few exceptions, it is usually
March 2005 IDEA Fitness Manager
financially beneficial to pay in cash rather than opening a line of credit. For example, financing 10 machines at $3,000 each, using a credit line of 10% interest, will cost you an additional $3,224 in interest alone if you make only minimum payments over the course of a 2-year loan. (That is more than the cost of an additional machine!) If cash purchases are not an option, most manufacturers can refer you to their preferred lenders. Some will even work directly with the bank and set up all the necessary paperwork. You should also inquire about leasing options or extended payment terms. These are particularly attractive for start-up companies that have not begun membership sales or may have limited funding. Other influences that will affect your pricing to a lesser degree are freight and delivery fees and your club's proximity to the warehouse. Trucking companies are generally contracted to deliver and assemble the equipment. If your club is located in a rural area or if it requires delivery after hours, your pricing will most likely be higher. If some aspect of your club's architecture requires that the contractors move the equipment up or down stairs or if they will be removing used equipment, count on an additional fee. When allocating funds for the purchase, you should consider all these factors and then confirm the details with your account representative before you sign the final purchase agreement. You may also have some financial latitude if you are a high-profile facility with national or local exposure. But you will need to be a keen negotiator to make a case for the potential marketing value of your pending purchase. For example, if your university-based fitness facility hosts international track meets or your club boasts a celebrity clientele that often buys expensive home gym equipment, then you can offer a marketing value to the equipment company. Today's manufacturers all need "showcase" facilities where they can invite VIP guests to tour and try their product. So don't be afraid to open the dialog with any manufacturers with whom you are considering doing business. Finally, inquire whether you could save money if you were to sell back your used equipment or trade in an outdated
model of the same brand. To gain and retain your business, some account reps may "buy" your used equipment and discount the value from your bottom line.
Know Your Account Representative's Role
A great equipment account representative should always be working for you. He or she should
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