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>These customers go onto our blacklist that we graciously introduce to our less-capable competitors. Why not keep them? Doesn't sound like anything that can't

by deveac 14y ago

>These customers go onto our blacklist that we graciously introduce to our less-capable competitors. Why not keep them? Doesn't sound like anything that can't be addressed. Insert language defining scope as only in contract with verbal, email, and other communications besides formal change orders not binding. Rude? Imperious? Browbeating? Fine with me. As long as I can lock you down on paper I'm fine with it. You can corral most customers like that and shrug of the distasteful personalities...as long as they are paying their bills. That's the deal breaker right there. Even lying on what they have for competitive offers. It doesn't matter what they say as long as you know your margins and make your decisions based on that. Psychologically it can be painful to know that you took money off the table for what turned out to be non-existent competition, but it won't bite you as long as you are negotiating with a solid grasp of your costs and profit potential. This type of behavior is so standard that it doesn't even bother me. Really, they wouldn't be doing their job if they didn't do this in a lot of cases from one point of view. If you suspect your customer is lying about competing bids and you feel your margins are dipping close to below acceptable levels, try a large increase in margins on a smaller sized order or project to test the waters every once in a while. It really gives good feedback that you can use to make decisions when confronted by that behavior in the future. I have a couple clients who like clockwork, ALWAYS try and talk the price of a quote down after submission. I look at my margins and decide if I'm willing to do it based on that alone, but every once in a while when we're really busy and I get a quote request from them for a medium or small sized job, I will increase the margin to 20% past my ideal rate to see if they bite. They usually do. So now when they try and talk me down on a larger project I just 'see if my distributor can move at all on the pricing'. Turns out he can't. Sorry. I tried. Most of those games are rare though. Our firm is often subcontracted out, and I openly discuss my margins and those of my customer that is requesting a quote. Being open, honest, and transparent really goes a long way. I'll often send a quote along and follow up with a phone call that goes something like this: "Hey xxxx, I just sent that number in. Take a look at it. I've got about 20 points on it, -how much were you planning on marking my number up, -is that going to leave you enough margin?" 9 times out of 10 they say yeah, and appreciate me asking if they are set on their margin. When they ask for a price reduction, it's usually with the sense that we're both in it together, and they aren't looking at me as an adversary, and they are more honest about what number from me is the HIGHEST they are comfortable with. That information is golden, because I am usually bidding against other firms (at least to start). I've had many contractors stop competing my bids just because of this type of communication (as well as the execution of our firm as well).

yourapostasy 14y ago
> Our firm is often subcontracted out... This might be the difference between our experiences and responses. Most of my work is direct, corp-to-corp, B2B. We're steadily climbing up the value chain each year, and find that we have to directly interact with procurement departments more often. For me, it is not a matter of what we can negotiate and lock them into terms we can live with; I've done that before, but fortunately now we aren't in the cash position to have to do that. It really comes down to the unavoidable reality that these customers' procurement methods cost us a ton of sales time that we could more profitably spend elsewhere on customers that more appreciate our value props. As for transparency on margins and per hour rates, we avoid that because we price on business value: if your business benefits by $X+N from spending $X with me, we both win. I've concluded from experience that sharing this information simply opens you up for piecemeal negotiation and commoditization in the future, which doesn't currently fit into my company's business model, but certainly YMMV.

by deveac 14y ago

yourapostasy 14y ago

> Our firm is often subcontracted out... This might be the difference between our experiences and responses. Most of my work is direct, corp-to-corp, B2B. We're steadily climbing up the value chain each year, and find that we have to directly interact with procurement departments more often. For me, it is not a matter of what we can negotiate and lock them into terms we can live with; I've done that before, but fortunately now we aren't in the cash position to have to do that. It really comes down to the unavoidable reality that these customers' procurement methods cost us a ton of sales time that we could more profitably spend elsewhere on customers that more appreciate our value props. As for transparency on margins and per hour rates, we avoid that because we price on business value: if your business benefits by $X+N from spending $X with me, we both win. I've concluded from experience that sharing this information simply opens you up for piecemeal negotiation and commoditization in the future, which doesn't currently fit into my company's business model, but certainly YMMV.