This week’s Let’s Talk, our experts answer the question: what’s your go-to strategy when suppliers try to squeeze your margins?
Every business owner knows the sinking feeling: another supplier price increase notice arrives, and you’re already calculating how much deeper it will cut into margins that were tight to begin with. The irony stings.
These suppliers often became trusted partners back when your business was smaller, hungrier, and had more flexibility to adapt. Now that you’ve built processes around them, invested in their systems, and grown dependent on their reliability, the power dynamic has completely flipped.
Absorbing costs and hoping for the best slowly bleeds your business dry. Most business owners feel stuck choosing between bad options and worse ones. So, how do you stop big suppliers from squeezing your margins without destroying relationships that keep your business running?
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Eamon Williams, Procurement specialist, OneAdvanced
“For many Australian businesses, large suppliers can erode margins by exerting pricing pressure and enforcing unfavourable terms. Protecting profitability requires strategic procurement and clear visibility across the supply base.
“OneAdvanced’s Spend Management solutions give organisations the insights they need to take control, providing real-time data on spend, supplier performance and contract compliance. This enables procurement teams to negotiate with confidence, identify alternative suppliers and reduce dependency on dominant vendors.
“By automating the spend management process and using advanced analytics to detect overspend and benchmark pricing, our platform helps businesses optimise procurement decisions, reduce risk and improve commercial outcomes.
“Ultimately, it empowers businesses to build supplier relationships grounded in transparency, accountability, and long-term value, effectively countering margin squeeze.”
Emma Boucher, Partner at McGrathNicol
“A strategic approach includes strengthening contractual terms to ensure your pricing and KPIs are clearly defined, while also reducing the risk of non-compliance. Monitor your financial obligations and performance closely to avoid contractual breaches. Align the financial strategy with commercial goals to better understand what margins your business can sustain and negotiate accordingly. Where possible, diversify your supplier base to reduce dependency and improve leverage. Foster strategic partnerships over transactional ones; encouraging transparency and collaboration to drive mutual gains. These actions will protect margins and enhance your business’ resilience in increasingly complex supply chains.”
Oleksandr Honcharov, CEO, FlawlessMLM
“When you rely on big suppliers, it’s tempting to believe they hold all the cards. But price pressure often grows when you don’t communicate your long-term value.
“The key is to stop competing on price and start negotiating based on business outcomes. At FlawlessMLM, we work with enterprise clients and see that suppliers often push margins down when value is seen as replaceable.
“So flip the script: show how your solution drives measurable revenue or retention. Offer co- marketing, data insights, or exclusivity in return for better terms. And if the relationship becomes one-sided – don’t be afraid to walk away.
“Great partnerships are built on mutual value, not just leverage.”
Hilary Saxton, CEO, Property Mastermind
“It’s a familiar feeling for many entrepreneurs when there’s a sudden shift in the market or a supply chain hiccup. Before you know it, a big supplier is squeezing your margins until you can barely breathe. In property development, this is a daily reality and overcoming external pressure starts with a relentless focus on internal clarity, belief, and action.
“Too often, we get caught up in the chaos of a project and lose sight of the fundamentals. When you skip a step, whether it’s due diligence, financial feasibility, or market research, you create an opening for suppliers to exploit. For example, one of our mentoring graduates successfully completed a duplex project, initially projecting a $400,000 profit but ultimately making $600,000 because they followed every step meticulously. That extra $200,000 wasn’t luck; it was the direct result of a structured approach that minimised risk and maximised returns.
“My advice is, don’t let yourself be a victim of circumstance. Make a clear, actionable plan, with a framework of steps to follow, so you can take back control of your profitability and build a more resilient business.”
Alexander Laureti, Managing Director at LMS Advisory
“In today’s competitive market, small businesses can feel squeezed by large suppliers. Protect your margins by ensuring all contracts and documentation are professional, clear, and aligned with big business standards from day one. Include detailed terms, conditions, warranties, exclusions and proof of insurances.
“Negotiate and review agreements carefully, and seek professional advice to confirm they are fair and sustainable.
“Building and maintaining strong personal relationships with key people within the supplier’s business can also help you address issues before they escalate.
“Monitor your supplier concentration closely—if one supplier becomes too dominant, your leverage decreases. Diversifying your supplier base gives you more flexibility and negotiating power.
“If a supplier’s terms or pricing become consistently unfavourable, don’t hesitate to compare alternatives. Even exploring other options can create justifications for pushbacks in negotiations and keep your business nimble. You need to adapt and survive!
“By staying proactive with contracts, relationships, and supplier diversity, you can prevent margin erosion and keep your business profitable.”
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