Business negotiatons....

[Becoming]

Not to mention the cost we proposed is already AT LEAST 30-40% lower than typical market cost. ....

I would say this might be part of the problem - why so low already - because you are new? that is quite a big discount- itself alone this positions you BELOW your competitors in a potential clients eyes

bottom line is, he's trying to cut 1/4 of the cost, simply because we are a young partnership. Despite the fact that we have over 20yrs experience between the 3 of us....

Maybe some of it is because you are already 30-40% below market- he figures you can take off some more as well

i would look for things you can address INSTEAD of total cost to him but be ready to walk (can you afford to? - if you can't maybe he knows it) sometimes that is all it takes to earn the respect of some of those types

 

[sh4dowf4lcon]

If you have a service industry business, where you generally provide services on a contract basis, is it pretty much expected that your clients will try to low ball you on the price and negotiate a cheaper quote?

I find this to be a very frustrating part of my job.....I put together quotes of what I think it's going to take to get the work done, and am constantly being low balled....

Often I get personally offended, because I know what my time is worth, and what current market rates are.....and being as I am just starting out on my own, I quote low. Yet, I still get low balled....it's a constant battle.

I'm just trying to understand the workings of the business world in this sense, and develop some negotiating tactics.

Much of the time, those types of contracts are politically awarded. that really sucks, when you are wasting your time and you think you are trying hard to earn business. I feel your frustration, keep working hard. you cant find "sunshine" sitting in the shade.

 

[jerkbox]

I would say this might be part of the problem - why so low already - because you are new? that is quite a big discount- itself alone this positions you BELOW your competitors in a potential clients eyes


Maybe some of it is because you are already 30-40% below market- he figures you can take off some more as well

i would look for things you can address INSTEAD of total cost to him but be ready to walk (can you afford to? - if you can't maybe he knows it) sometimes that is all it takes to earn the respect of some of those types

yeah, it's because we are just starting out....we want to get business. this is kind of a side venture for us, that we can hopefully grow into a full time gig.

we can't offer the level of service an established agency can in terms of turnaround and availability. but we can do the job. so, we go after certain types of clients right now. and this would be a perfect opportunity.

but, we will walk if need be.

if he walks...he'll find that he is going to pay a lot more, and get a lot less.

 

[jerkbox]

I have yet to win a contract I've bid on. Which I'm exceedingly happy for. Even after laying out my pricing model and schedules someone still comes in on a low bid.

Luckily for me they take the low bid.

How is that lucky? Well, because I end up coming in later on to FIX the crap the low bidders did. I generally make up to 2 - 4 times the amount of money I would have made on the contract to begin with. I smile all the way to the bank every time someone starts talking low numbers instead of QOS and dealing with pricing models.

lol...that works!

 

[jh1]

 

[Becoming]

Matt- My employer sends of to a lot of seminars and training on this type of thing, of course there is on the job learning as well... do you do the same, or do you also have books you can recommend?(learning more/new things is always possible)

Lots of people like that mackey "swim with the sharks" one from what I have heard....

yeah, it's because we are just starting out....we want to get business. this is kind of a side venture for us, that we can hopefully grow into a full time gig.

That is a tough spot to be in... when I first started I found out I got a lot more business (and respect) once I learned to stick to my guns and at the same time approach it more like described in Matt's and my posts (though I think he has a somewhat different business by nature of the value of the contracts he works with)....

I understand you have to price it fairly for what you can offer though - it is not reasonable to charge the same and offer less.. make sure that they how this value benefits them

if he walks...he'll find that he is going to pay a lot more, and get a lot less.

I hear you - it is tough and sometimes potential clients are idiots no matter how many times you spell it out for them...

 

[MattTheSkywalker]

Matt- My employer sends of to a lot of seminars and training on this type of thing, of course there is on the job learning as well... do you do the same, or do you also have books you can recommend?(learning more/new things is always possible)

Honestly, I have a job where I work with CEOs of large companies, wall street people, and fund managers from the best of the private equity firms every single day.

I am just surrounded by the very best in the business. Never been to a seminar. I wish I could help you here.

Understanding the customer's perception of risk is the heart of any deal.

 

[Becoming]

.....

Damn- lucky dude - guess I just had to learn those same things the hard way... LOL

I don't work with the others, but we do work with CEOs/GMs of companies on a regular basis (though they being in a client role)

Nothing truer than the quote about understanding the customer's perception of risk..

 

[Razorguns]

All i can say is: always go into the mindset of who you're selling to.

Look at it this way: What's the market rate for what your'e doing. *IF* there are others out their cheaper, WHY should they go for you?

Can they get it done with the cheaper methods? If so, then they'll go there.

Can they get almost similar quality (take out your own biases) (remember i said think in THEIR minds)? If so, then they'll go there (the cheaper bidders).

*IF* like Matt says -- 1) You're competitive and 2) Your quality and pricing structure match then you should have no problem.

If all the burger joints are selling burgers at $1.50. And min is 0.99c. I got nothing to worry about. Mine is CHEAPER. Point blank.

If all the burger joints at 99c and mine is $1.50 but i can SHOW mine is way superior to them AND SUPER QUALITY OF A BURGER *IS* IMPORTANT TO THESE GUYS then I got nothing to worry about.

Now if all they care about is just throwing some food at their customers (say a festival) -- then they obviously don't care about the quality. So $1.50 for them is useless.

It's all about realizing what they want. If there's a match, prove it to them. If there isn't (obviously you can't decrease your quality or lower your price to .99c) -- then you just gotta walk. Let them go to the cheaper places.

Your time is also money. If it ain't working. Go concentrate on other clients.

No one is gonna give you money for free. Realize this. You gotta SHOW THEM it's in THEIR FINANCIAL INTERESTS to pay this money. Try to avoid the "their quality sucks, ours is better" angle. Because you know they probably hear that from all the other vendors too. So it turns into a silly "he said, she said" scenario.

 

[jerkbox]

lol...

funny thing is, we are already significantly cheaper than any agency will be....

he seems to think that we should be even cheaper, given that we are just starting up.....

frankly, I think he just has that much of an ego, that he finds it necessary to try to assert control.