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  • dropping your prices

    Well, we've discussed this before, but here it is in a new context.

    I've a meeting coming up with biggest single customer, ~20% of gross. On the table is an additional $60k of work annually, will more than double my business with them. Will need to buy a pumper, find a place to park it, and probably hire a guy, or else work out something with the pumper I use now and just take the jetting. Will be asked to drop rates to get the work, don't know how deep.

    It'll mean going to bed with them in a big way. Expanding to a point that is not sustainable should we have a falling out, or else committing to providing pumping I will have to sub out and may end up having to cover myself.

    Also it'll mean taking that work from another local company who's had it for years, and I don't want to step on toes.

    I'm really torn on this... I've got things ticking along nicely as is, and am both scared and excited. Turn it down I could lose what I've got with them. Take it and could end up doing not much more for similar $ after discount if it doesn't materialize, or worse that scenario after shelling out to ramp up for it, or even if it works out as advertised making other folks mad. But it could put us over the top to where we can decide if we want to either bust butt and give everybody nice fat raises, or have an extra guy to take up slack so it's not such a pain when a guy wants to take time off or gets sick.

    Guess I'll just see what the numbers look like and sit with it and see.
    This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.

  • #2
    Re: dropping your prices

    Originally posted by Ace Sewer View Post
    Well, we've discussed this before, but here it is in a new context.

    I've a meeting coming up with biggest single customer, ~20% of gross. On the table is an additional $60k of work annually, will more than double my business with them. Will need to buy a pumper, find a place to park it, and probably hire a guy, or else work out something with the pumper I use now and just take the jetting. Will be asked to drop rates to get the work, don't know how deep.

    It'll mean going to bed with them in a big way. Expanding to a point that is not sustainable should we have a falling out, or else committing to providing pumping I will have to sub out and may end up having to cover myself.

    Also it'll mean taking that work from another local company who's had it for years, and I don't want to step on toes.

    I'm really torn on this... I've got things ticking along nicely as is, and am both scared and excited. Turn it down I could lose what I've got with them. Take it and could end up doing not much more for similar $ after discount if it doesn't materialize, or worse that scenario after shelling out to ramp up for it, or even if it works out as advertised making other folks mad. But it could put us over the top to where we can decide if we want to either bust butt and give everybody nice fat raises, or have an extra guy to take up slack so it's not such a pain when a guy wants to take time off or gets sick.

    Guess I'll just see what the numbers look like and sit with it and see.
    Oh the decisions of owning your own business.....

    Always wonderful, isn't it?

    I catch myself asking others about similar things at times. I often think that subconsciously I just want them to reinforce my opinion.

    You're a smart guy. You'll know what to do. Don't cut your throat and also don't feel too bad at exploring the opportunity vs. the competitor. If it wasn't you, it would be someone else. Your client has already proven that by asking you about it.

    And nothing ever happened unless it is in writing.

    Good luck.

    J.C.

    Comment


    • #3
      Re: dropping your prices

      if u don't take a chance you'll always wonder but if u do and it fails you'll be pi##ed at yourself forever so go to the meeting find out the missing #'s sleep on it and trust yourself and if still in doubt mark c

      Comment


      • #4
        Re: dropping your prices

        How much work do you get from the local pumper who's toes you'd be stepping on? Would you be able to make the truck pay with just this account or would you have to suppliment it with other septic work?

        How good is the other guy bidding on the work? If he does it at a discount and fouls it up will you get it back at a non-discounted rate?

        Just some more to think about.
        www.ClinkscalesSeptic.com

        Comment


        • #5
          Re: dropping your prices

          Ace... What is the motive of the client? Cheaper service? Better Service? I don't think it is fair of them to want and get both.
          Seattle Drain Service

          Comment


          • #6
            Re: dropping your prices

            Nope , Your relationship will change, You'll walk away,then hate Yourself.
            I can build anything You want , if you draw a picture of it , on the back of a big enough check .

            Comment


            • #7
              Re: dropping your prices

              i had a similar account and needed to buy a trailer jetter. fortunately it was a piece of equipment that i was looking at anyways and this basically allowed me to warrant it.

              a pumper truck is something for me that is useless. so unless you can use it in your normal work, it's going to be a big expense just sitting there. remember it cost money even when your not using it. insurance, maintenance, storage, payments. if i can't buy it outright, i don't finance it.

              better make sure that you can find a use for it besides this account.

              rick.
              phoebe it is

              Comment


              • #8
                Re: dropping your prices

                And you don't have to turn it down, you just say "how much where the other guys charging? WOW I can't even come close to that you are getting a great deal with them"
                Seattle Drain Service

                Comment


                • #9
                  Re: dropping your prices

                  Absolute NO.


                  You're about to take on debt, to work cheaper....and then step on toes with your local competition to do it?


                  Say that 3 times and click your heels, decide if you're just the interim fix for this company.


                  Greed is pushing you somewhere you shouldn't.


                  Growing pains in business don't come with knocking down your prices. You're being asked to jump and they are also telling you "how high".

                  These situations never pan out in the long distance, ever. There's enough stories from others and abroad to figure that out.
                  Northern Kentucky Plumbers Twitter Feed | Plumbing Videos

                  Comment


                  • #10
                    Re: dropping your prices

                    one more thing. what happens when they find someone willing to drop there prices? then what? your toast, thats what. now your going to have to unload that pumper truck. give me or Trent a call "if" the price is ''low'' enough we might buy it.
                    the only dumb question is the one that is not asked!

                    Comment


                    • #11
                      Re: dropping your prices

                      Excellent points all; thank you.

                      Not sure what they are after out of this; I'm just going to throw that back at them and ask. We've always operated on an excellect service and response model rather than a price model. But other's prices have crept up to where they are higher than ours, and we've considered bumping ours. Might do the bump and offer them current rates.

                      Anything I take that will require hiring or major equip puchase will have to have guaranteed work.

                      Pumper I use now... that might be the way to go if I move on this...saves me the investment. I honestly don't want to pump anyway; just a logistical nightmare. 2 hr drive each way to dump grease or sand/oil trap waste, which is what the bulk of the pumping will be. Can't leave it on the truck overnight in winter as my shop ceilings are too low to get a pumper inside, so you get half a day of work in and then have to boogie to get it off the truck. Whole enviromental thing to address with sand/oil traps.

                      On the flip side, I could find plenty of work for the truck pumping septic as well, and that will generate more work as septic inspections are now required here every time a property sells, and a small grease trap can be put on top of a septic and then dumped at plant instead of hauling the 4hr round trip.

                      But at the end of the day, I don't want to pump. I've dabbled with grease traps, and hate them, and have ended up subbing the ones I've got out to the pumper mentioned above and just kept the jetting. And it'd just make his day and really cement that relationship. But when his truck goes down and something needs pumped, I'm out on a limb.

                      No way around the bad blood if I take this; gotta think on that. Pumper I use now and my business are both dissatisfied employee spinoffs from the direct competitor I'd be taking the work from. There's been some bad feeling there already, and I've worked hard to start to reverse that, and this would undo the progress I've made there.

                      Meeting is with corporate parent of large group. Could get ugy there too as up 'til now, each lower level manager has been free to use who they like. Some use me, some use others, mostly based on long term relationships. I've picked up what I have by being the guy who answers the phone and rolls out at midnight. For those who now use others, I could end up being the guy who was forced down their throats by corporate instead of the guy who helped them out when they were hurting.

                      Whole thing started months ago when we got a letter from corporate asking what we could do for them to have them put us on 'preferred provider' status. Don't even really know what that means, if we are locked in and they are not, or we both are, or what. Apparently we were the only drain guys who bothered to answer. Sent off the reply and forgot about it, now here it is.
                      This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.

                      Comment


                      • #12
                        Re: dropping your prices

                        Hey you are miles ahead! You answer the phone and do good work that merit by itself will take you past this interview and every one after this.
                        Seattle Drain Service

                        Comment


                        • #13
                          Re: dropping your prices

                          Hold steady on your rates. Just inform corporate that you are the one answering the phone and rolling out at midnight, that has to be worth something. If no one else the maint. guy that called at midnight, since corporate does not take the calls at midnight.

                          I also have a long standing customer that calls when they need something done 24/7. When the economy tanked things changed for them and it was all about price, now that things are looking up for them but they have a new payment system. Use to bill and pay from the local plant (15 days and I had a check), but now everything goes to the home office in Ohio and then to some middleman for payment, now it is 49 days. Time for a little price increase since I am being used as a lending institution by corporate.

                          If you cut your price and buy a pumper truck to secure their work, get all of the details in writing and make sure they are going to provide x amount of dollars in work per year from however many plants they have. Make sure you are the only one on the call list or at least on top. Make sure the payment terms do not change. Ask if they are willing to sign a two year contract at your current prices. Might explain your rates, must be cheap enough since they keep calling you. Explain your work ethics, must be good since they keep calling you. Ask what kind of responce time they are looking for, what if you are tied up on another job and can not just drop what you are doing and run to them. I dought very much you can pin them down on much of anything that is in your favor. Corporate is all about themselves and will never tell you the whole picture, especially if you don't ask. The bastards are sneaking and coniving and will screw you for a buck!! Then again they might be willing to play ball.

                          Go to the meeting with an open mind and don't jump into any decisions, as said before sleep on it first.

                          Just some more thoughts....................good lick with it.

                          G3
                          Last edited by G3sprinklers; 01-21-2010, 08:56 AM.

                          Comment


                          • #14
                            Re: dropping your prices

                            Ace,

                            You're clearly not comfortable with buying and operating a pumper and you're talking yourself out of it so the clear answer is don't buy the pumper. You apparently have a successful business model and things are going well for you so I wouldn't rock the boat too hard.

                            However, that doesn't mean you still can't get into the pumper business. Why not talk to the business with whom you don't want to create hard feelings and tell them of your opportunity? Get them to give you some kind of a preferred guaranteed rate and then subcontract them to do the pumping work. It will be a win win for both of you. With a better relationship who knows the pumper company might start referring other work to you when possible.

                            Who knows how much additional work you can get by being the corporate "preferred provider" if there are other business entities owned that you aren't aware of.

                            Good luck with the opportunity you've earned!!
                            Time flies like an arrow.

                            Fruit flies like a banana.

                            Comment


                            • #15
                              Re: dropping your prices

                              Ace, not only is the truck a huge investment, but after you hire someone worthwhile to run it, how much $$ will you really be ahead? Lots of good points brought up already. Also sounds like your heart isn't into septic work anyway, no offense to Trent or other guys that make a living pumping/septic. If after this meeting you don't want to do it, I'm sure there's a diplomatic way to tell your client. When you're a small business like we are, tough not to spread yourself too thin. Make no mistake, they are buying YOU along with the tools and service you provide. You'll make the right decision.

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