Home > Uncategorized > Tight margins and cutting good customers a break.

Tight margins and cutting good customers a break.

The end tank on my car’s radiator failed so I went out shopping for one today.  It made me think about profit and discounts for good customers.

I like the idea of cutting a good customer a good deal if you can but when you let one customer know you value them more than others you’re also letting your other customers know that they don’t matter as much.  It’s the difference between saying, “THE customer is #1” and “THAT customer is #1.”  Of course that doesn’t happen if you keep things hush-hush but people do talk.  During the time I was a self employed welder I gave a fair price and that was that.  With a few exceptions it didn’t matter who you were and the price for a given task was the price whether you were rich or not.  I aimed to make money on the job but wasn’t going to get rich in the process.  I’ve needed a day job to make most of my money for quite a few years now and wonder if this attitude is why.

People would sometimes plead poor or want to haggle but for that to work I would have to arbitrarily add more to my initial price to be conceded during haggling or loose my profit.  Would that wider margin alienate some prospective customers?  Would that be fair to customers who just accepted my price?  I’ve told prospective customers my offer was a take it or leave it situation and I’ve also agreed to a lower price just to get some work.  I won’t do that anymore because I’ve never lost money on a job I didn’t get.  The next guy who arbitrarily asks me for a lower price will be asked what he wants removed from my scope of work to accommodate the cut.  I like to help people but I’m not the welfare office.

Sometimes there just isn’t wiggle room.  Here is an example for the work I do on gates and overhead garage doors:

Usually someone makes money from their labour and a mark up on the supplies they use(which pays the overhead of procuring, transporting, and possibly warehousing the supplies).

The only garage door wholesaler in my area refuses to sell to my company(I’m not approaching them as some homeowner wanting wholesale(which I’ve seen them do, by the way))  for fear of alienating my former employer who is their biggest customer.  Because of the situation every door part I buy is either paid at full retail or trucked over by ferry to Vancouver Island and the shipping costs leave me no room for marking up the price and remaining competitive…

….so I don’t get paid for time spent dealing with my parts so it comes out of the labour portion of my bill, which I can’t inflate because of wanting to be competitive and fair…so there is less room to deal with unforeseen costs or sleazy attempts at post hoc negotiating.  It’s hard to be competitive AND profitable in a cornered market.

Advertisements
Categories: Uncategorized
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: