Full Version: Getting Killed On Price
From: Rodney Gold (RODNEY_GOLD) [#11]
18 Apr 2007
To: UncleSteve [#10] 18 Apr 2007
I take 5-6x the cost of materials as a good rule of thumb in terms of pricing a fabricated object - its not cast in stone.
if your expenses in running a business mean your selling price is 3x more than your competitors , being blunt , you are innefficient in that market or with that product. Its a wake up call to examine your pricing or production or cost of production.
From: Stunt Engraver (DGL) [#12]
18 Apr 2007
To: Rodney Gold (RODNEY_GOLD) [#9] 18 Apr 2007
Rodney,
If we're doing it right, we do have a unique product or hard-to-match service.
I agree with what you're saying, if the example were novelty items that can be found anywhere, or a product like imaged T-shirts. Competiton is stiff and people will go with whoever is cheapest.
It's the difference between creating an impenetrable niche and duking it out with the masses; and I've never been much of a fighter. :-)
From: Harvey only (HARVEY-ONLY) [#13]
18 Apr 2007
To: Rodney Gold (RODNEY_GOLD) [#11] 18 Apr 2007
If your competition has an overhead of $0 per month, and you have $6000 per month, meeting his prices will bankrupt you fast.
Getting every job out there is NOT a sign of good business, usually just the opposite.
I would much rather lose a job that will result in a loss, than lose established customers that represent a gain.
From: Mark (MAXMACHINE) [#14]
18 Apr 2007
To: ALL
A long time ago, I decided that I was not going to work for free. Price is not what you sell, service is. We have large clients that don't even ask what the price is going to be... their primary concern is "is it going to be on time" and "will they deliver it". The item in question is worth at least $10.... unless you like working for free. Then it's worth about $3.
Possible solutions:
go fishing
reduce your overhead
stop eating
live in a cave
I like #1.
Mark
From: Rodney Gold (RODNEY_GOLD) [#15]
18 Apr 2007
To: ALL
Ok, you got a competitor out there thats a 1/3rd of your price and is already taking your customers - Its yet to be proven that their service is significantly worse than yours.
In my book if you dont react to that your business is in major trouble. You can wait till your competitor takes your market share and perhaps folds , and you maybe get your customers back after he goes belly up oir delivers bad service , thats if you havent gone down the tubes in that time.
Or failing that , you can abandon that particular product or market segment if you cant compete there and find some other area where you can. Either way , you have to react.
From: Dave Jones (DAVERJ) [#16]
18 Apr 2007
To: ALL
From: Laser Image (LASER_IMAGE) [#17]
18 Apr 2007
To: Rodney Gold (RODNEY_GOLD) [#11] 18 Apr 2007
There is a significant difference between your price being 3x the competitors and their price being 1/3rd of yours. You are taking the stance that the OP is wrong in his pricing/production and he needs to take action to correct the problem. I submit that the "problem" is with the other business - he doesn't value his work highly enough and is undercutting his profitability and needs to correct his pricing accordingly.
Just because a competitor is whoring himself out doesn't mean I have to, or that I am wrong!
Not sure why you accused the OP of being the person who is wrong, it could just as easily been the competitor. For that matter, it could be both - the OP was a bit high and the competitor is a bit low.
Gary
From: sprinter [#18]
18 Apr 2007
To: ALL
My question is why would the customer even bother coming back to show an invoice for a cheaper price anyway?? Sounds like something is being left out here.
But I agree that the $8 price is more than fair, if not on the low side.
From: Mike (MIKEN) [#19]
18 Apr 2007
To: ALL
From: gt350ed [#20]
18 Apr 2007
To: sprinter [#18] 18 Apr 2007
From: Goodvol (JIMGOOD) [#21]
18 Apr 2007
To: gt350ed [#20] 18 Apr 2007
I tend to agree that if the "typical" cost of a product is $9 and someone sells it for $3, the masses should not have to jump down in price. If you think they should, what happens if someone does the job for $1 or even for free!?! Do you pay your customer a $1 for the privilege of filling his order? 8-O
Personally, I think you should outsource your plastic plates to this guy so you can free up your time and push him closer to the poor house! You can still charge $9 and make your 3x and keep him busy not making money!!!
Jim
From: RALLYGUY (RALLYGUY1) [#22]
18 Apr 2007
To: Goodvol (JIMGOOD) [#21] 18 Apr 2007
Sweet idea!
Ask him for wholesale pricing.....Hahahahahahaha!!!!!!
Now that's taking lemons and making lemonade. :)
EDITED: 18 Apr 2007 by RALLYGUY1
From: gt350ed [#23]
18 Apr 2007
To: Goodvol (JIMGOOD) [#21] 18 Apr 2007
From: Rodney Gold (RODNEY_GOLD) [#24]
18 Apr 2007
To: ALL
In terms of pricing , For him $8 is fair , for the competitor $2.50 is fair (I would actually sell an item like this based on reasonable qty at about $5 or a little less - cost of material is round 75c ) Pricing is also about what the market can bear.
However this does not mitigate the fact that the guy has a REAL problem in his market in that he has a competitor agressively pursuing his customers and is pricing stuff at WAY below him.
The days of him pitching his pricing at what he feels is fair and what he feels the market can bear are over now there is another player on the scene thats spoiling the party....thats the reality!
We can all bleat unfair practices or stick to your guns etc , but thats not gonna help him at all. If he cant compete in that market or segment , then he needs to get out of it and if he wants to compete , he will HAVE to drop his prices or respond to his competitors strategy.
He asked if he's outa line - in the circumstances he is in , he IS out of line in terms of pricing.
From: sprinter [#25]
18 Apr 2007
To: ALL
From: Bill (ALBILLBERT2000) [#26]
18 Apr 2007
To: ALL
Ok my two cents.. it was never determined what the qty of plates a month was. Also what other business does this customer bring into your shop. If you just tell them you wont budge.. and that this is your price.. you could be loosing all the other potential business there giving you.. I would call the customer talk to him.. tell him your pricing and that you would love to keep his business.. and what does he think you have to do to keep your business..
Normally you would be surprised. The customer is just like us trying to cut costs, they like you , your prompt professional and great service. For him to show you the other companies price is him telling you to see if you can come to a compromise.. you might be surprised as to the price the customer thinks would be fair..
think of all the business.. not just the one job... but again.. your not saying how many is a nice amount of plates per month... is it 15 is it 40 or 100 or more..
EDITED: 18 Apr 2007 by ALBILLBERT2000
From: Jer (DIAMOND) [#27]
18 Apr 2007
To: sprinter [#18] 18 Apr 2007
From: Stunt Engraver (DGL) [#28]
18 Apr 2007
To: Jer (DIAMOND) [#27] 19 Apr 2007
Jer,
This is a true story. Pretty much the same line was given to a engraver friend of mine.
My friend said, "That's a great price. Why are you talking to me?"
The would-be customer replied, "Because that guy went out of business."
Here's a separate "low bidder" story, from just this afternoon:
A previous customer calls. He wants me to remove some existing engraving from his radios (walkie-talkies) and re-engrave them.
Note: For customers who don't want to replace the plastic housing, I occasionally route-out the existing engraving, which leaves an indented rectangle, then engrave new information in another area.
I said, "Oh, you bought some radios from another company and want to put your information on them?"
He said, "No, my company's name is already on them. The place I bought the radios from engraved them for free and I don't like the way they turned out. From now on, all my engraving goes to you."
This won't be the first time I've fixed another engraver's handiwork.
EDITED: 18 Apr 2007 by DGL
From: Ozzy Fox (CLIVEGARAWAY) [#29]
18 Apr 2007
To: ALL
I’m with Rodney on this, my view is that this guy is giving you a chance to deal, question is do you want to?
Most people would just take the $2.50 deal walk away and you’d be wondering why you didn’t have a customer.
Case in point I did some work (white plastic labels) for an electrician who came back said I was more expensive than “in the city” but
I was more convenient and would I consider my prices, I gave him a good deal next time (not $2.50 though) and now he is a regular,
last 3 months spent $2500 (to a small one man band that’s a good customer!.) He wanted a bit better deal not a cheap deal!. Fact is I probably overcharged first time.
IMHO if you’re doing 3 or 4 labels a week the price is fair if you’re doing 100 a week it’s not.
regards Clive.
From: Boz (CHEDDARHEAD) [#30]
18 Apr 2007
To: Jer (DIAMOND) [#27] 19 Apr 2007
Jer, I think it is pretty interesting that you said, when I delivered the parts and the invoice, the customer said that he had paid only $1.50 last year. Then he checked his invoice, and found that he really paid $2.50. Fair enough.
But why was he doing business with you, when his "previous" supplier was so cheap? Maybe his "previous" supplier was no longer in that business.
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