How do you know if The Price is Right?

Linda LaitalaBusiness, Career, Leadership, ManagementLeave a Comment

How do you know if the price is right?

Harold owned a manufacturing company that shipped millions of parts to customers all over the country. One of his biggest customers demanded special packaging, just-in-time delivery, and small batch quantities. At the same time, they were paying late, aggressively negotiating prices, and taking discounts that had not been authorized.

When quotes came in for next year’s orders, the buyer wrote a personal note on the cover, “Sharpen your pencil, Harold!”

Harold worked up new prices for his customer, but they were higher, not lower than what they were currently paying. Anticipating the customer’s displeasure, he also educated himself on the customer’s business. Then he made the appointment, and delivered the quote in person.

As expected, the buyer was unhappy with Harold’s prices and their meeting lasted much longer than scheduled. However, in the end, Harold walked out with a purchase order that included his price increases and assurances that the discount errors would cease.

What did Harold do to bring about such a transformation?

He had done his homework. He knew the markets they sold to and how price sensitive they were. He knew the goals that corporate handed down to purchasing. He also knew the industries where they were targeting potential new business, and the critical role reliable suppliers would play.

He also knew his company’s costs and profit goals. He’d calculated the cost of production, packaging, and shipping. He also knew how much extra it cost him (interest on borrowed money) when payments were late. Requesting undeserved discounts made matters worse.

Harold was able to respond to every complaint. What customers make you stay awake at night? What do you need to know about them that you don’t know?

The road is easier together,

Linda Laitala, President
Raven Performance Group

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