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  • Getting nickel and dimed by a customer...

    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.

  • #2
    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.
    Peter - novice home machinist, modern motorcycle enthusiast.

    Denford Viceroy 280 Synchro (11 x 24)
    Herbert 0V adapted to R8 by 'Sir John'.
    Monarch 10EE 1942

    Comment


    • #3
      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-
      Last edited by darryl; 06-04-2010, 04:25 PM.
      I seldom do anything within the scope of logical reason and calculated cost/benefit, etc- I'm following my passion-

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      • #4
        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.
        Mike

        My Dad always said, "If you want people to do things for you on the farm, you have to buy a machine they can sit on that does most of the work."

        Comment


        • #5
          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"
          Weston Bye - Author, The Mechatronist column, Digital Machinist magazine
          ~Practitioner of the Electromechanical Arts~

          Comment


          • #6
            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.
            .

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            • #7
              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.
              How to become a millionaire: Start out with 10 million and take up machining as a hobby!

              Comment


              • #8
                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......

                .
                .

                Sir John , Earl of Bligeport & Sudspumpwater. MBE [ Motor Bike Engineer ] Nottingham England.



                Comment


                • #9
                  Quoting

                  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.

                  Comment


                  • #10
                    Originally posted by John Stevenson
                    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!"
                    Last edited by x39; 06-04-2010, 06:52 PM.

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                    • #11
                      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 .
                      .

                      Sir John , Earl of Bligeport & Sudspumpwater. MBE [ Motor Bike Engineer ] Nottingham England.



                      Comment


                      • #12
                        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.
                        Sometimes the professional is hidebound by tradition while the skilled amateur, not knowing it can't be done blazes a new trail. -JCHannum

                        Comment


                        • #13
                          Originally posted by MotorradMike
                          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

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                          • #14
                            Knew one

                            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

                            Comment


                            • #15
                              Originally posted by IdahoJim
                              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.

                              .
                              .

                              Sir John , Earl of Bligeport & Sudspumpwater. MBE [ Motor Bike Engineer ] Nottingham England.



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