A supplier who is also your customer can create a tricky situation when calculating purchase prices. You want to deal fairly with both sides, but also protect your own margins. In this article, you'll learn how to handle this professionally without putting your profitability at risk.
Why this is tricky
When your supplier is also a customer, you get a dual relationship. You want a good deal as a buyer, but you also want to keep a satisfied customer. This can lead to:
- Pressure to accept lower purchase prices than market rates
- Confusion about which price to use
- Conflicting interests during negotiations
- Difficulty calculating your actual cost price
Calculate your actual purchase price
Regardless of the relationship, you always need to know your real costs. Start with this calculation:
💡 Example:
Your supplier/customer delivers fresh salmon to you for €18/kg. The market price from other suppliers is €20/kg.
- Supplier price: €18/kg
- Market price: €20/kg
- Advantage: €2/kg
Your actual cost price for recipe calculation: €18/kg
Always calculate with the price you actually pay, not the market price. But keep track of both prices for comparison.
Establish transparent agreements
Make clear agreements about both relationships to avoid confusion:
- Separate administration: Treat purchases and sales as separate transactions
- Market-rate prices: Both parties get fair market prices
- No offsetting: Pay invoices normally, no cross-offsetting between transactions
- Contractual agreements: Document delivery terms, independent of the customer relationship
⚠️ Watch out:
Avoid cross-subsidies. If you pay too little for purchases, you unconsciously compensate in your selling prices. This distorts both relationships.
Calculate the impact on your margin
Analyze how the dual relationship affects your profitability:
💡 Example calculation:
Monthly purchases from supplier/customer: €3,000
Monthly sales to customer/supplier: €1,500
- Discount on purchases: 10% = €300 advantage
- Discount on sales: 5% = €75 disadvantage
Net advantage: €225/month
Keep track of this calculation to see if the relationship remains beneficial for both sides.
Compare alternative suppliers
Regularly compare with other suppliers to protect your position:
- Request quotes from at least 2 other suppliers quarterly
- Compare not just price, but also quality and service
- Calculate total costs including transport and payment terms
- Document these comparisons for your own records
Use KitchenNmbrs for clear registration
In KitchenNmbrs you can record multiple suppliers per ingredient with their prices. This lets you see directly:
- What price you pay to your supplier/customer
- How this compares to other suppliers
- The impact on your food cost per dish
- Your savings or extra costs per month
This helps you make objective decisions, independent of the personal relationship.
How do you calculate the right purchase price? (step by step)
Gather all price information
Note the price from your supplier/customer and request quotes from at least 2 other suppliers for the same product. Compare not just the price, but also quality, delivery time, and payment terms.
Calculate your actual cost price
Use the price you actually pay for your recipe calculations and food cost. This is your real cost price, regardless of any discounts or benefits from the dual relationship.
Document the difference
Keep track of how much you save or pay extra compared to the market price. This helps you assess the total value of the relationship and make transparent decisions.
✨ Pro tip
Set up a quarterly review in which you evaluate the total value of the dual relationship: how much do you save on purchases versus how much discount do you give on sales? This helps you maintain objectivity.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Should I give a discount because my supplier is also a customer?
No, treat both relationships separately. Give market-rate prices for your sales and pay market-rate prices for your purchases. This prevents confusion and conflicts.
Can I offset invoices against each other?
Better not to. Pay invoices normally and keep both administrations separate. This provides clarity and prevents one relationship from affecting the other.
What if my supplier/customer asks for an extra discount?
Treat it as a normal negotiation. Assess whether you can give the discount without harming your margin, independent of the supplier relationship.
How do I prevent conflicts of interest?
Make clear agreements about both relationships, maintain separate administration, and regularly compare with other suppliers. Transparency is key.
Do I need to record this differently in my accounting?
No, record both transactions normally. Purchases as purchases, sales as sales. No special treatment needed, but clear documentation of agreements is important.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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