In 1975 I was a print buyer. I ran a small graphics department for a door manufacturer and bought the things we couldn’t do ourselves. That meant any job with photography and four colors was a purchase. I collected bids, selected the printer and awarded the jobs. I was like many of the people you sell to now.
One of my first projects was an “Entry Door” brochure. I can still remember the sales reps, their companies and approximate bids. Some of these guys still do business in Atlanta so I’ll skip the names. The point will be clear, regardless.
Printer #1 quoted $17,300. That was a lot of money in 1975. It was much more than a year’s pay for me. I remember being astonished that printing could cost so much.
Printer #2 quoted $16,900. I consider these two numbers essentially the same. If you get bids like this you can assume that both companies understand the specs and know how to produce the job. At least they know what their costs are.
Printer #3 quoted $13,000. He explained that they had gotten aggressive and wanted the order. He convinced the estimator to give him a good price. It was this guy’s number that taught me pricing (not estimating) is an art. He and his managers “guessed” what the other two would do and really low-balled the quote.
Apparently, I did not respond fast enough. All I did was visit my boss to discuss the prices. This 30 minute delay concerned printer #3. He called me back and cut his price to $12,000. He explained that they really wanted the order and found some savings when they took another look at the estimate. I thanked him and got off the phone.
About an hour later he called again. This time he cut the price to $11,000. They were continuing to look and found even more savings. He wanted to make sure I knew how much they wanted this order.
Well…he got the order. He never knew how much he cut his own price. He never knew how big a laugh my boss and I enjoyed at his expense. His salesmanship amounted to nothing more than price-cutting. He was like a contestant on the old TV show, Name That Tune. “I can produce that brochure for…$11,000.”
Think about this a minute. The nearest price was $5,900 higher than the lowest bid. The printer left thousands on the table. He convinced his company that I was a shrewd buyer and that he had to be cheap to get the business. He was going to get the order before he started cutting. He was already the best price.
I could have easily told the other two printers that they were approximately $6,000 too high. They would have been astonished and would have assumed that I wasn’t comparing apples to apples. The whole charade would have served (perhaps it did) to cheapen the work and to create a downward spiral in price and profit…and…the buyer didn’t do it…the sales rep did.
Now…fast forward several years. I was selling printing. I had an opportunity to quote a large color project for a computer graphics company. I can remember this bid too.
I quoted $36,000. My competition (a much bigger company) quoted $44,000. I didn’t get the job. The customer was more confident in the other guy. He had more experience and this was an important project. His grasp of the situation showed and it won him the work.
I was furious. I ranted, “If $8,000 in savings won’t justify the business what will? Just how low do I have to be to get your business? Would $10,000 do it…$11,000?”
The client calmly replied that he didn’t plan to exclude me when the bidding started. During the process he became concerned that I didn’t have the experience necessary to protect his interest. My low quote added to this and my tantrum sealed the deal…for the other printer.
Now why am I telling you all this? What does this have to do with you and your sales career? What lesson could there be for us today?
It’s simple. Every sales staff has reps that will and reps that won’t. You notice I didn’t say can’t. I said won’t.
This very day there are salespeople adding money to quotes without a second thought. There are service reps on house accounts doing the same thing. These people believe in their service and realize that price is only part of the contract. They know that they bring value. They know that clients will pay what is fair.
This very day there are also salespeople that won’t do it. They believe that price is all that matters and can’t imagine that anyone thinks otherwise. Their work is marginally profitable, they don’t sell as much and their earnings show it.
Please trust me on this. Your confidence about price is directly related to your self esteem. If you have a low opinion of yourself and your company…you are going to put a low value on your product. It will show in the price you submit.
I’m not suggesting that you don’t have to be fair. I understand that you need to be competitive. That isn’t the issue here.
The issue is asking for the price you deserve. The issue is, understanding what the client is really buying. It isn’t just price. If it is…you haven’t been selling. You have only been quoting. One pays much better than the other.