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beanbag
06-04-2010, 04:06 PM
Hey guys,

Recently I have been doing a fair bit of machining work for a company, and the nice thing is (or used to be) that I would just name a price and they would say OK. Recently, one of the guys there has been trying to squeeze a discount out of me, using various tactics such as "we've given you so much work so far" and "well how much does it REALLY cost you to do this" kind of tactics. I have managed to hold firm on the price because I'm perfectly happy to NOT do the work for less than I asked for. I come seeking advice for how to deal with this situation.

One option is that I can go the health care route, and purposely overcharge, and then let the guy have his stupid discount if it makes him happy.

One of my friends suggested that I pretty much refuse to explain why each operation costs so and so, because that would only encourage nit picking. Instead, he suggested that I give them "options", like, "if you really want to save $10, I can forgo countersinking these holes here", etc.

I would have liked to simply state that they can choose to take it or leave it, but my friend suggested that I don't whip out this ultimatum except as a last resort.

While the money from these jobs is nice, they delay me from achieving my life goals, so it's not like I would feel bad if I didn't do these jobs.

Peter.
06-04-2010, 04:16 PM
Given what you've said I'd respond with 'you've given me a fair bit of work, and I've always given you fair prices. I see no reason to change an arrangement that has worked so well to date, but if you no longer think my prices are reasonable you can feel free to send the work elsewhere.'

It'd be different if you relied on the work for a living I guess but from what you have said above I don't see why you need to suffer the extra stress.

darryl
06-04-2010, 04:23 PM
It would seem that you could, in a few sentences or less, state that you are charging a fair price for your work, and that to continue to do his work you will need to maintain that price. I agree that it's counterproductive to give an ultimatum, or to say 'take it or leave it'. Don't get involved in the nit-picking, simply suggest that maybe they would like to check around to see if they can find someone willing to do the job for a lesser price (don't say cheaper). Keep your response concise and business-like. Don't enter into an argument about it.

Like you're suggesting, you don't really want to continue to do the job for less compensation than you are presently getting, so stick to your position. You may have to gently suggest that you do have other obligations and need to get back to them. Don't let them waste your time. A line I have used once or twice is 'Sir, I do need to get back to work, so if you don't mind-

MotorradMike
06-04-2010, 04:29 PM
I say you have to be firm if your pricing is fair. I'd tell them they can probably get things done cheaper elsewhere.

Once I quote a job I stick to the quote.
If somebody doesn't like the price I'm OK with it.

If they were unhappy with the quality of my work, I would not be OK with that.
So far it hasn't happened.

Weston Bye
06-04-2010, 04:32 PM
Recently, one of the guys there has been trying to squeeze a discount out of me, using various tactics such as "we've given you so much work so far" and "well how much does it REALLY cost you to do this"

Been there, had it done to me. Don't like it. The guy is worm slime, a chisler who probably thinks he can bully a little guy. Now, they do regularly attempt to beat prices down from suppliers, but that treatment is normal for average sized businesses, but they are used to it and can fight back if the volume is high enough.

I have seen customers (real big ones) come in and demand to see the books to help set the "proper" price that they would pay, dictating what profit was acceptable.

Is your customer happy with the quality and prompt delivery of your work? If so, remind him of the adage "Price, speed, accuracy - choose two" he will probably respond "Perfect, Free and Now"

Mcgyver
06-04-2010, 05:01 PM
are you making the same thing over and over or is each job different.

in any negotiation, tryto see the other guy's view. maybe he's been charged with driving down supplier costs, has a new baby on the way, has heard rumors of layoffs and feels the need for some wins etc etc. Even if you hold prices, gotta let him have some face or he may become your enemy out of spite

if its a regular run and he's been pushing, a good tactic is the best defense is a good offense. with surprise respond, gee, I was going to request a meeting about increasing price. tooling costs have gone up, utilities are up, haven't had a increase since ____ etc etc. We need to talk about a price increase to keep going like this or a tooling surcharge etc

If its job shop work, price high and discount BUT get something in return....minimum monthly commitments or a standby charge of X when volumes fall below etc. For every inch you budge have a quiver full of things to ask for in return.

end of the day he can hammer you until you say forget it, but those are a couple of ideas.

Black Forest
06-04-2010, 05:06 PM
BeanBag, Keep the emotion out of the business. Now it is time for you to be a real business man and not an artist. I hope you know what I mean.

The guy that is trying to get you to lower your price is doing what he thinks is a good job for his company. He thinks maybe, that his job is to try to save his company money by trying to negotiate a lower price. If he is being reasonable in his approach then to me it is OK. BUT it is also OK for you to represent your company to get as much as is fair for your work. So all you have to do is tell him you have calculated your charges fairly and although you understand his asking you will have to stand by your rates. Don't tell him to look and try to find someone who will do the job for less. Don't get emotional. Don't get confrontational. Don't back him into a corner. Stay calm and don't get defensive. It is better for you to remain clear.

John Stevenson
06-04-2010, 06:04 PM
First of all swear at him, then laugh out load when he asks for a reduction.
Use phrases like "Go on them make me laugh I could do with a good howler "

I think my best one was asking the guy if he'd every though about voluntary euthanasia.

Seems to work for me but I don't give a rats arse anyway......

.

oldtiffie
06-04-2010, 06:17 PM
I have no problem with bargaining.

If I do a quote, that is what I want to do the job.

If they ask you to reduce your price they are asking you to re-quote and by inference and perhaps in fact have rejected your quote.

They are in effect accusing you of being dishonest or of "gouging".

If you reduce your quote you are in effect canceling your quote and accepting their offer.

If I am (was) asked to re-quote at or to a lower price, I'd cancel and withdraw the quote and inform the "client" accordingly.

I would never "buy" a job just to get a job as that is just a "race to the bottom".

I have asked several potential clients to leave the premises when they showed me a competitors quote and asked me to beat it. They were told to beat it.

There is no need to quote on any job let alone all of them - and there is no need to "give reasons ............... ".

Part of any quote should include the "Terms of Trade/Payment" - and enforce it.

As soon as you commit to a job you are in effect extending credit to the client but you have to make your own payments for any material or shop time or machine use else your suppliers who have extended credit to you will or may withdraw their credit to you and/or "tighten up" their terms to trade to you.

Cash-flow is pretty well everything to a small business as is attention to your "accounts payable". Its all too easy to be "short" and heading for insolvency.

x39
06-04-2010, 06:49 PM
First of all swear at him, then laugh out load when he asks for a reduction.
A good friend of mine is well known for his outrageous antics on the phone. One time while on the phone with a customer who was being obstinate in defending a wrong decision, my buddy had finally had enough. The conversation then went like this:
My friend- "You're in southern California, right?"
Customer- "Yes..."
My friend- "Are you outside?"
Customer-"Yes..."
My friend- "Is the sun shining?"
Customer "Yes..."
My friend- (yelling) "THEN GET THE F*** INSIDE! GET OUT OF THE SUN! THE SUN HAS COOKED YOUR BRAINS!"

John Stevenson
06-04-2010, 07:05 PM
Head shed at a local company always tries to catch me out by saying "Howyergoing" when he rings up and I do the same, it got to be a bit of a ritual.

Few weeks ago he rang up and I answered the phone "Howyergoing "
He said how did you know it was me ?

I replied I didn't but I knew you would be ringing over the breakdown so I've been answering the phone with Howyergoing to everybody for the last two days.

He paused for a moment and said I believe you ...........

Many years ago I was working away and the phone goes it's usually someone I know as the works number, in fact all 3 of my numbers are ex-directory.

This guy who I didn't know starts off

" How much will you charge me to...........

I interrupted him and said if you have to ask you can't afford it and put the phone down. Not got a clue to this day who he was .

Kibby
06-04-2010, 07:22 PM
I truly believe that behind every problem there is an opportunity. I'm thinking the fellow's request for a lower price could easily be countered by suggesting that a lower price per item could be met when ordered in higher quantities. Let's say your typical price for a run of 500 pieces is $500. Tell the guy he can get 750 pieces for a savings of 10% or whatever you feel is a doable discount for a higher quantity.

IdahoJim
06-04-2010, 07:46 PM
I say you have to be firm if your pricing is fair. I'd tell them they can probably get things done cheaper elsewhere.

Once I quote a job I stick to the quote.
If somebody doesn't like the price I'm OK with it.

If they were unhappy with the quality of my work, I would not be OK with that.
So far it hasn't happened.

I have to agree with Mike....once you start negotiating your bid price, you're screwed. Negotiated prices ALWAYS go down...never up. Also when you agree to negotiate, and the price goes down, it tells the customer you had excess margin in the original price, and they will assume you ALWAYS have excess margin in your bids.....bad thing to have a customer believe.
Jim

JanvanSaane
06-04-2010, 07:59 PM
Its the corporate mentality. Had a manager years back went out and changed vendors that would work for 2 dollars less per hour flat rate. They charged him for every nut, bolt, washer, loctite, and silicone. Costed him, plus some of them didn't know what they were doing. Another time he negotiated a deal on smurf piss. He sent us our 25 cases, turned out it was from down south, had a freezing point of +20. Did not work real well in Omaha during the months of nov, dec, jan, and feb. Butter him up a little bit, explain your tooling costs, plus, etc,etc. He will have a big ego and sometimes they will cut off their head to get rid of the pimple on their nose. Jan

John Stevenson
06-04-2010, 08:14 PM
it tells the customer you had excess margin in the original price, and they will assume you ALWAYS have excess margin in your bids.....bad thing to have a customer believe.
Jim

Very true.
Some years ago we needed some new windows in the two rooms downstairs, big bay windows with 3 frames per window.

We had a load of people out and got the standard run around even though i told them I wasn't interested in deals I wanted their best price first and up front , we still had sign up tonight, one off deal etc etc start off big and finally come down to 1/2 original quote.

All told leave it with us we will get back to you.

One guy shows and I told him we just wanted the one room doing, best price, no messing.

He came up with what I thought was a reasonably priced job and he was firm on his pricing.
I then asked if he could better it for two rooms. He replied that he couldn't move on the window pricing but seeing as the fitters were there he could drop a small amount because of the shared labour.

This sounded good to me so he got the job, they made a real nice job, we had one hickup but they rectified this is short order and discussed it with us as it was being done.
Even though they made a mistake I would have them back again because it's how people admit and rectify mistakes that sorts the good guys out.

.

terry_g
06-04-2010, 08:22 PM
I used to work as a sub-foreman mechanic at a Kenworth truck dealership. We had a few customers that would come in at the end of the month and complain about their bill.
Even though all the labour times and parts were quite reasonable. We learned that for these customers we would add a percentage to the bill, then when they religiously
came in with their end of month billing after a few minutes of complaining and whining we would give them a credit for the percentage we had added. They would go away happy.
With several trucks in the shop all equipped with VHF radios all set on scan We would hear them telling all the other drivers how they got a good deal.
We had just made their day.
Maybe this is how you need to deal with this customer.

Terry

38_Cal
06-04-2010, 08:42 PM
Double the price and then knock off 40%...:D

David

2ManyHobbies
06-04-2010, 09:00 PM
It is obvious to me that you are the winner of cheap-fast-good, otherwise the customer would be going elsewhere.

If haggling is a one-time event, it is good for customer education and you might have the opportunity to get paid for the work you enjoy and let the customer save money by doing more of the stuff you don't.

When you have a repeat offender, if it is the same part the same way every time, do they just not have pockets deep enough to order in quantity? Are you flirting with a job you won't get paid for? That speaks for itself. Now if it is always something different, yet still the same haggle, tell them you can knock something off of that newly minted consulting fee (omitting the words newly and minted). Low haggle days, knock 50% off of it. High haggle days, only knock 10% off of it. If they ask where the new fee came from, the answer is you decided to increase itemization for clarity. Just don't make a snow job out of it. If they haggle for an hour, that is time they should be paying you for because it is time they are using. If they aren't consuming your time and energy, then there is no reason to charge them for it.

Rustybolt
06-04-2010, 09:04 PM
First off. you're not a whore. Tell him that if you like. But also tell him that the quote is your best price for the work requested. He is not entitled to know how you came to that price. He is, however, free to solicit quotes from other companies.
You might also ask him if his company is having trouble meeting their financial responsibilities. That usually shuts them up.

Frank Ford
06-04-2010, 09:34 PM
I work for the public, one job at a time fixing guitars, so my interactions may be different from those whose customers are companies, although there may also be a face-to-face when dealing with them.
My best observation is that the customer wants or needs a bit of control in the process so as not to feel taken advantage of.

I never discount labor.

If a job is complex with lots of different operations, I may well suggest that some of them could be eliminated or put off to a later date to save money now. Almost always, just having the power of that decision is enough to make the customer feel comfortable in authorizing the full job.

When asked why I can't discount labor, say a "deal" for doing several instruments logged in at one time, I reveal that what I'm selling is "time. " - my time at the bench, and I have no way to get an extra supply. That rings a bell with most folks, and the simple act of thinking of it that way gives them a bit more confidence that I'm being straight with them.

When I'm asked why my rate is higher than another's, I tell the customer that I have my expenses and overhead which might be different, and follow it by, "I hope we all get what we pay for," or something like that.

The fact that our repair shop is always overbooked with work makes it easy for me to talk with the kind of confidence that "reads" well from the customer's view. I don't ever say it, but I don't need any particular job, and I think it shows in subtle ways.

Arcane
06-04-2010, 09:35 PM
If he's been happy with the price you've charged him up till now, and the job quality, it's obvious that YOUR PRICING isn't what has caused the change. As others have said, it's something on his end that has put a burr under his saddle and what has THAT got to do with the price of tea in China, eh? If he truly thought you were gouging him, he would have said something long ago. Next time he comes in and starts whining, put a small bucket of sand on the counter in front of him...then when he asks what it's for, hand him a mallet and tell him to start pounding....

airsmith282
06-04-2010, 10:03 PM
stick to your guns and dont bargine or they will expect it all the time, if your price is fair then you dont need to be flexable.i know iam not, latley a few people have tried to get me that iam bring you alot of business or some other sob story, so i just tell them well givien my labour is still half of every one else then nope sorry no bargine beiside you bargin once they want it all the time,. even when i sell a bike they want it cheaper i tell them go else where then ,

iam not afriad to be an ass hole, its in my nature not to take crap from no one.i dont go for sob stories, my work is top notch and my prices are great. iam worth more then iam charging thats for sure, so why bargine,

i also charge upfront to or no work, no money no product or no repair, i leanrd long ago the hard way of putting my cash on the line and now i dont i set a price and i warn them if it comes to more then you will owe me more if its less you get some change back , and you know after all these years iam still in business and my customers respect me a I them and when they need work done they always come back to me , and they send others to me as well .

so i say stick to your price or pull the joke they offer you lets say 80.00 you say ok how about 300. then they say ok ill give you the 150.00 for the job works pretty simple and fast that way ,

cuemaker
06-04-2010, 10:18 PM
Speaking from to many years of experience... it never hurts to very polite. That does not mean to be NOT firm, sticking to your guns etc..

I work hard to give them impression I am working for them and want them to be happy with my work. (I sometimes have a hard time with that if the people are stupid)

When I had a cue repair shop in a pool hall, I would regularly turn down business for various reasons, most of the reasons stemmed from the person coming to me with the work, not the work itself. Easier to do when you are busy with paying work.

x39
06-04-2010, 10:50 PM
You might also ask him if his company is having trouble meeting their financial responsibilities. That usually shuts them up.
Good line, I like it.

wierdscience
06-04-2010, 11:51 PM
Don't ever back down on labor rates,if you do that opens the door for them to beat you down everytime.


20 years worth of well honed one line responses-

"How can you charge that much"? Simple,I have a calculator-


"Does this repair carry a warranty"? Yes,it's lifetime,bring it back and I'll kill you-
Alternate answer-Yes,if it breaks in half you own both pieces-


"I'm not paying you that much" Then I'm not doing that much-


"Why did that job cost so much"? Because my electric meter spins faster than yours-


"How much to put a tack weld on this?" About four times what it costs to weld it-


"Can I have it today?" Do you have a time machine?-


"You think that's enough weld?" No,I just roll my leads up every so often out of habit.

"What kind of business are you running?" Obviously working for you it's a non-profit.

Rattrap
06-05-2010, 12:01 AM
Never lower the price on labor/service. If you do, you are telling the customer that you were overcharging previously.

If materials are involved and you can pass along a savings, then good for you and the customer. Labor? No.

I don't need or want a customer who would ask to see my books.

RancherBill
06-05-2010, 12:21 AM
Benabag you've had 25 replies that are saying stick to your guns. Normally I could write a 24th answer to make it an un-interrupted stream, but....

I wish I'd had you 25 guys as customers when I used to peddle products. I can't recall any notable customer that after the third or fourth number didn't try to squeeze me on price. Nobody in the real world wants to pay column price.

No matter how wonderful and great you are in your own mind, in the customers mind you are a commodity. You might think you are the only great machinist in town, but in the customers mind there are several.

The guy is probably not a slime, he is probably on some Profit Improvement Program (PIP). His success on the PIP is reflected in his paycheck.

My advice would be just to politely say no to his questions. Nine out of ten guys on a PIP go around and shake trees to see what will fall out. Stay away from discussions on specifics as they will end up in discussions of 'spreadsheet facts". "Spreadsheet fact" discussions always spiral out of control and go in strange and un-predicted directions.

I really wish the Stephen Hawking "Way Back Machine":eek: worked and I could get you 25 guys as customers, I could have been, should have been, would have been RICH with you all paying list price.:D :D

2ManyHobbies
06-05-2010, 01:14 AM
I really wish the Stephen Hawking "Way Back Machine":eek: worked and I could get you 24 guys as customers, I could have been, should have been, would have been RICH with you all paying list price.:D :D
If custom fab work came with list prices, I'd have a different set of hobbies, fewer scars, and far fewer interesting stories. Gasoline, groceries, and utilities are probably the only things I've bought at list price for about a decade, and only about half the time on the groceries. :D

Jim Shaper
06-05-2010, 01:25 AM
I've currently got a customer who wants a 66% refund based on one of his buddies claiming they would've done it for what that number would end up at if I were to refund them. I told him to pound sand. Now he's claiming he's unsatisfied with the quality of work, well he came up with that bit 6 days after receipt of the part (at which point he was ecstatic about it) and had every option to refuse delivery and as such refuse payment of the agreed amount (which he gladly paid at the time).

Now he's threatening to bad mouth me across the interweb. "Good luck with that" I told him, and then explained how libel laws worked and that those sites wouldn't want to be co-defendants in court with him. Been 3 days now, so who knows what he's up to, but I haven't heard a peep out of my other customers/friends, and I'm sure I will if he starts talking smack.

In this economy, it's hard to hold your ground when so many others are struggling for ANY work just to try to keep the lights on, or the mortgage company at bay. As such, the buyer is trying to use that angle to their advantage and sometimes it works, so you really can't blame them.

I've got a repeat customer who's always trying to get me to reduce my bids, but it's backfired on him and he doesn't know it yet. I'm not working for him anymore. :) Next quote he gets will be insane, and I know he won't pay it.

Circlip
06-05-2010, 03:54 AM
There are two parties in industry, suppliers and customers. As a supplier, you have your own reputation to upkeep. Return business means that a customer it happy with the product you supply to them for whatever reason. A loaf of bread or a sack of potatos for his own dinner table costs both of you the same and when the corporates try the "We work on a 30, 60 or 120 day payment system, telling them that you tried that with your local supermarket (Super/hypermart) and they say this is unacceptable ( or words to that effect) sorts out how they feel about you as a supplier.

The customer you are dealing with is a buyer and is employed to get the best deal he can for his employer. Don't know how long ago the part was quoted but what effect have material prices changed since then? Lots of years ago, I had to quote the costs of an item based on the prices of material on an individual there and then basis and explain that when they got round to ordering there could be a price difference. They were not best pleased, but that was the only way it could work.

I was in a meeting with the sales director of a company I worked for and we were informed of an impending visit from a customers buyer who would "Probably" be looking for a cut in the prices of a new supply of parts we had made for a previous contract. Despite the SD agreeing to state "We'll check our figures before commiting to any change", when confronted with "I want a 10% cut across the line", he IMMEDIATELY agreed.

The rub being, when taken out for a business lunch, the buyer proceeded to tell us how he'd screwed a one man band for 20% on his supply.

A couple of months later I left the company, six months later they folded. Within twelve months, the customer (a multi-national) also folded.

You don't have to get stroppy or laugh and jeer, but what you could do is tell your customer that you're going to put the phone down/leave his office and for him to ring back when he's found someone else who can give your level of service/quality and delivery that they have come to expect as the norm and due to the economy, you should actually be negotiating an INCREASE in component cost.

Regards Ian.

oldtiffie
06-05-2010, 05:45 AM
Quoting and being in business means making wages plus costs plus a good return on capital and investments. If not you are paying your own wages and subsidising the "client". You might be better off selling up and investing the money and taking a few "business-related" tax-deductible "business trips" in your "business" car until things sort themselves out.

The only thing worse than a job that is a loss and getting paid is any job where you either only get paid in part and/or late - or at all. Your bank manager will not be too impressed when you need a loan to "tide you over" to put bread on the table, pay your creditors as well as any "separation" payments that you may need to make to employees that you need to "let go".

It won't take long for the word to get around to your competitors, creditors and the "sharks" that want to cut your rate/quote.

Assuming a quote is accepted it becomes - or should become - a written legally binding contract which should specify the processes for additions, reductions and variations and how they are costed out as well as the "charge out" hourly rate etc. which should all be agreed and in writing. "Liquidated damages" are a PITA. Progress payment and deposits and retention amounts need to be in writing as well.

Being too dependent upon a single or just a few clients leaves you very exposed in the worst possible way to either being exploited or taken advantage of. It often leads to the client using the clout he has to just offer selected work to you on a "take it or leave it" basis.

There should some "fat" or a "float" or "hollow log" aka "contingency funds" and arrangements - "just in case". 10>20% is a good starting figure. Cutting things too tight just to buy a job is just asking for trouble.

There is nothing wrong with "farming out" stuff to a specialist contractor and putting a good margin on it as you are responsible for that "farmed-out" work as well.

Allowance has to be made for the cost of utilities as well as recurrent costs and consumables and the depreciation and replacement or up-grade of machines and plant.

If you have to go to the trouble, time and effort to chase a late or non-payer it can cost you more than the money involved. If it needs to be "written off" it can take a while to take the necessary recovery action and to convince the Tax authorities that it is an irrecoverable loss that can be allowed as a tax deduction. Some people will sell the debt at a discount to "Factoring" companies who chase the debt. If your paper-work with your client is not correct, selling the debt or recovering it or having it allowed as a tax deduction may be a lost cause.

Nickles and dimes may be the least of your problems if big $ are at risk.

John Stevenson
06-05-2010, 05:58 AM
Best one I heard was a guy being rung up to say the customer was looking for a 10% reduction in price.

Without missing a heartbeat he replied "Glad you rang, you have saved me a phone call, I was just about to ring you to explain that because of increased material and utility costs we are raising the price by 20 % "

Weston Bye
06-05-2010, 06:45 AM
...I really wish the Stephen Hawking "Way Back Machine":eek: worked and I could get you 25 guys as customers, I could have been, should have been, would have been RICH with you all paying list price.:D :D

25 years ago I was in business and I paid your shop rate - until it became too burdensome and I was able to develop alternate methods. I always tried to develop and maintain good working relationships with my suppliers. If things changed or fell apart, or the jobs I was quoting wouldn't bear your shop rate, I either found a different supplier or, if the economics were to my advantage, I learned how and tooled up to do the needed job myself.

I started out designing and building control panels and wiring machines. When jobs I was quoting needed hydraulics, and the fitter's price seemed unreasonable, I didn't ask him to cut his rate. I did the job myself, and found I could match his time and better his rate. Same with plotter and blueprint charges for drawings. I "tooled up" with a plotter and blueprint machine. I took a job that required a control panel and a fixture. When my supplier for fixtures suddenly jacked the price, I began doing my own machining and built the fixtures myself. Thing is, some of my suppliers were also customers. They built machines that required control systems. They couldn't do what I did, but I always charged the going rate for my work.

Your Old Dog
06-05-2010, 08:11 AM
Dear Beaner,

Next time he brings you a job tell him "I'm not sure I can do it. I'm a little busy and you don't seem all that happy with the price anyway. If you can't find anyone else to do the job bring it back if you like and I'll see if I can fit it in for you."

All the best,
Abby

rowbare
06-07-2010, 12:23 PM
Next time he brings you a job tell him "I'm not sure I can do it. I'm a little busy and you don't seem all that happy with the price anyway. If you can't find anyone else to do the job bring it back if you like and I'll see if I can fit it in for you."

I like that, nice and tactful.

bob

spkrman15
06-07-2010, 02:14 PM
Bean Bag,

You have to run your business the best way you can. Easy for us to give our feedback but we don't have to pay your bills...you do. My guess, your customer might have a new boss, higher operating costs, new barganing agreement with the employees, etc. Now they are trying to mainting or increase their profit margine.

Your contact is just doing their job. If you can get the same service and quality for a lower rate..then why don't you? Do you buy food or tooling supplies when they are on sale? Are cheaper at one store then the other? We all do. That is just good business....sound familiar.

My 2 cents. I like the positive approach. Tell your customer "If you make the order X+ instead of X, i can pass on some savings". I just informed a customer, that they have qulified for a preferential rate as they have spent over Y within the past year with me. It makes them feel good, their purchaser looks like they saved some money and i have a good customer who i am encouraging to spend Y with me every year. I also have an easy out if they don't continue to spend that amount.

This part is hard because we all take it personally. I did a job last week where their head machanic and shop foreman "commented" every 20-30 mins i was expensive. I was there a total of 15 hours. It got old fast, yet they still needed me to fix their machine as they couldn't. It had been down for 2 weeks.

Good luck. My philosophy is do good, HONEST work at a resonable rate and treat your customer how they should be treated as an equal, you both need each other. Do that...and they will come :).

Rob :)

gda
06-07-2010, 06:31 PM
I've currently got a customer who wants a 66% refund based on one of his buddies claiming they would've done it for what that number would end up at if I were to refund them.

Ask for the Buddy's number. Tell the guy that if this guy is that cheap then you have some work to sub-let out to him.

stoneaxe
06-07-2010, 07:49 PM
Let me guess-
He wants it cheaper, immediately, and perfect.

oldtiffie
06-07-2010, 08:38 PM
Your customer is not your friend and should not be regarded as such. At best they should be "business acquaintances" that you get on well with but with whom disputes may arise and may need to be settled either quickly or "legally".

Regular checking of customers bone fides and credit-worthiness via a credit reference company or bureau can be to your advantage.

http://en.wikipedia.org/wiki/Credit_reference_agency

All dealings need to be at "arms length" and "in good faith" but all arrangements need to be documented and contracted.
http://en.wikipedia.org/wiki/Arm%27s_length_principle

http://en.wikipedia.org/wiki/Good_faith

You should be as near to the top of secured creditors as you can get (to) if things "go wring" and you end up out of pocket, making a large loss, "holding the bag/baby", and looking to be a gullible fool - the more so if everybody else seemed to know and you didn't.

"Taking a hit" takes quite some making up - if it can be made up - the more so if you have assumed payment and made another commitment on that basis.

Setting too tight or thin a margin makes it very difficult to "lay off" work to another shop either for over-load or specialised sub-contracted work.

All paid work is only a means of making an income with a good %-age of disposable income (ie clear of all costs and disbursements).

If you can't confidently do that you'd be better off not starting or if having started you'd be better off getting out and cutting your losses.

hawgwrench
06-07-2010, 09:06 PM
An old saying,if I remember correct,stated "A man can be broke,A man can be tired,But its a fool thats tired AND broke"....if you cant make money on the job,then whats the point?.Appealing to to a "friendship" or using past (or future) business as leverage is nothing more that trying to get something for nothing. See the books?...here,have a good look,then put the ledgers in an onion sack and beat the brakes of'em with it.They want you to make NOTHING so they can make MORE. If you cant do the job for what its costing you PLUS a little more for profit,let'em take down the road. Why would they have trouble with that?,after all...business is about profit,right?

Carld
06-07-2010, 09:18 PM
beanbag, I read every post just now and then reread your opening post. You answered your question with your first post.

If I do a one off I do the best to give a reasonable price and if it is a production run I like to do two or three to see a time frame to give a price. When I do that the price is what time it takes for the job and there is no room for discounting the price.

I suspect your doing much the same so don't cut your price.

lynnl
06-07-2010, 09:19 PM
I've always thought it odd that most everyone expects to get some sort of special discount or extra good deal when employing the services of a friend or relative. ...it makes just as much sense, since he's such a good friend or close relative, to rather pay HIM extra. Right? :)

But no, that suggestion would not set well with very many people.

Black_Moons
06-07-2010, 10:03 PM
One thing iv seen some stores do is offer 20% off all prices, usally a small sign on the door or whatever thats hard to notice.

Anyone who comes in and just pays, gets that 20% off taken off at the till, no questions asked.

Anyone who wants to haggle.. Well, they start at 0% off (sticker price) and have to haggle thier way up to 20%. apparently some people even insist on 'not paying tax'.. (Rather illegal last I checked..) all of 14%, So the shop lets them 'not pay tax' insted of getting 20% off, And of course just pays the tax themselfs and pockets the 6% diffrence the customer gave them for being stupid.

So if someone must haggle, just incress all your quotes 20% to them and let them haggle you down a max of 20% :P

TGTool
06-08-2010, 01:07 AM
There's a story about a Quaker cloth merchant in Philadelphia back in the days before fixed price merchandising. Quakers typically figured what would be a fair price and charged everyone just that.

So a man came in to look at cloth, found some he liked and asked the price. When told the price he tried to haggle it down but the Quaker said, no, he knew what it cost for the stuff and the cost to run his business, it was a fair price and he was sticking to it. Finally the customer, totally hacked off, swore he would not buy that cloth from him at any price and stalked out.

Some time later he returned, somewhat sheepishly and said he had visited other merchants, realized it was a reasonable price and it was the fabric he really wanted. The Quake apologized and said that he could no longer sell it since the customer had sworn he wouldn't buy it at any price, and if the merchant were to now sell it to him it would mean the breaking of his oath.

Richard-TX
06-08-2010, 02:50 AM
Bean Bag,

I did a job last week where their head machanic and shop foreman "commented" every 20-30 mins i was expensive. I was there a total of 15 hours. It got old fast, yet they still needed me to fix their machine as they couldn't. It had been down for 2 weeks.



I would have asked them which they would prefer...a $50 a night skank or a $15,000 a night hooker.

Would they be thinking about what someone else has paid for their hooker or would they just relax and enjoy what the hooker is doing?

Regardless of the answer, I would then tell them to sit down, shut up, and just enjoy the ride.

jkilroy
06-08-2010, 11:24 AM
Always remember this simple saying...

Price is a demand control tool.

oldtiffie
06-08-2010, 11:53 AM
If you let anyone nickel and dime you into either or both reducing your quote or extending the scope at no extra charge or costs you have nobody to blame but yourself.

A quote (and attached conditions) should not only be a "fixed" quote but it should be the only quote.

If you think the first "try-on" and "win" by a customer is hard, I can assure you the whether the "word" gets around or not, the following "try-ons" won't get any easier.

A customer is not a customer until a firm agreement has been made as regards the scope of the work and costs etc. Before that he is only someone looking for a "price" to hawk or shop around or perhaps just a "tyre-kicker".

If anyone ever showed me a competitor's quote and asked me to beat it they got shown the door. I got really pi$$ed-off if it happened with one of my quotes. A quote is and should be regarded as "Commercial-in-Confidence".

I am quite prepared to be polite, courteous, firm and fair, but I don't get "friendly". I keep them at arms length.

It can cost a lot of time and effort from what may otherwise be chargeable hours to make up a quote - or answer long-winded or vacuous phone calls.

I never gave a quote with a break-down of hours, processes and time nor of any quotes I had from others who I would sub-contract part of the works to. Finish dates were OK.

There is nothing wrong with declining a job or a quote. Some seem to think that you have to quote to win on every job - not so. If you can't make a good profit give that job a "pass".

If anyone ever said that I charged more that the last time I'd just tell him that that was my price this time - take it or leave it. I didn't have to give reasons so I didn't.