Correct Customers are a commodity. I could get a further 100 customers tomorrow but make no money on the software I sold them.

Nobody shops by price alone. Some may place a lot more emphasis on price than others but it is only one factor. Hence we have a range of products that cover high cost to low cost for any market.

For DVD Arcam is High, MustSlipUp (I think they are Korean) would be low.
For Soup Heinz (UK?) is High, WalMart/Tesco Value is Low

Perceived Service, Perceived Quality, Luck/Chance, Perceived Reputation, Perceived Risk etc.

The customer makes a decision based on his perceived knowledge of a market place. I know very little about soup and therefore buy Heinz, it is within my price range and I can buy it in any supermarket. If I knew a lot about soup I may buy Tesco value soup but not Sainsburys as I may know which budget brands offer good value. Some may offer better value or even better quality than Heinz but I don't know.

If I knew I could buy Heinz cheaper elsewhere then I would and you guys, I suspect, would do the same, I mean you all work hard for your money and therefore want the most for it. Subject to similar circumstances I would not drive ten miles to save 1p on soup right?

McDonald's have made a few $$ on removing the risk from choice of eating place.

HiFi/AV is the same only the time spent making the decision process is hopefully greater than soup purchases.

Would I pay more for the same product from my dealer as I would the internet, yes I would, I keep saying so. The question is, how much more?

If I know a lot about the market place I am equipped to assess the risk of an internet purchase so thereby removing or hedging that risk, this leaves you with less benefits over over the internet, but you still have some considerable benefits.

They have come to you to give you the chance to lower your price to win the business. They didn't go to the Internet and ask them to open up stores/guarentee service levels/smile nicely at them etc.

They want you, remember this when negotiating.

They want the comfort level but feel they cannot or more likely do not want to pay your asking price(everyone likes a bargain). It is intresting that in a market/boot sale it is acceptable practice and in some countries it is expected to haggle. Buying beans from WalMart it is not expected to haggle. Buying your house or car some negotiation is allowed.

Buying a business, haggling once again is standard practice. If you don't beleive me then check out share prices.

So why the middle ground for Business to Consumer is there no haggling. Business to Business purchase decisions include haggling.

You just need to realise that it is not embarrasing or cheap talking about money. That it is not because the consumer hates you and wants to see you go bust. It is not because he does not value your service.

It is because he has limited $$$ and wants maximum products.

I read a statistic that said if Bill Gates saw a $100 on the ground on his way to work it was not worth his time to pick it up. He would make more money getting to work a second earier (I am sure he is not paid by the hour though).

So if your customer is very well paid he will not haggle as his time is more precious than the $s he will save.

If he is poor the converse applies, he can spend a long time haggling. If his time is worth less than yours it is even worse he will haggle for longer than you want and you reduce your price so much that you don't want his business. You may need it, but you won't want it.

Judge your customers, explain the benefits, offer alternatives.

I agree with the Time versus Money part from the above comment. I also agree with the facts that I am not a perfect customer.

However to combat the Internet Purchaser then you must admit that he has a valid point and understand his view point.

Then you can develop a solution to combat it. Yours being Service driven, such as presence, reliability, availability, support etc.

Offer alternatives, let him buy the same product from the Internet. Charge him for unpacking, testing, checking. We have PAT (Portable Appliance Testing), as you haven't supplied you should carry out one of these before fitting it, as a safe contractor. You guys can think of more surely.

Glad to have got so many pulses racing

Dave Goodfellow

Amen Shoe. We are contractors and every deal is a 2 way street. The customer always thinks he is doing us a favor by giving us business, but in fact, at the same time he is deciding if he wants us to do the work we are deciding if we want to do business with him. We have said no to customers saying simply I don't think we can accomodate you. Their reaction is often priceless.

Wow, alot of arrogance floating around in here. I do understand, but some of you must have business coming out your ears!

I'm a computer VAR and I've been doing custom networks for more than 10 years, while not the same biz I've been where you are. First it was Computer shopper & then the internet.

Everyone think he's a friggin computer expert too. I just keep my mouth shut and collect their money.

Bottom line for me was I can't compete with prices & I install whatever the customer wants. If they want to buy the equipment from me I tell them up front it will cost more, but I will stand behind if it goes bad. I will also return defective equipment they buy elsewhere, but I charge a pick up & delivery fee.

I charge $125 minimum $125 hourly & while I'll never get rich on that it pays the bills. While it's nice to make an extra couple k on a job selling hardware & software I don't care one way or the other.

It's seems to me some of you act like you need to play a shell game in order to get paid what you think your worth. I say if you can't tell them up front what your making than you're probably not worth it, thus you must play a shell game.

Those of you who explain exactly why you charge what you do should have no problem convincing a customer to buy your product & service. There's no need to play a shell game if your offering a good end product.

Let me clarify "customers as a commodity". I don't consider my customers as a commodity. We strive to develope an understanding of our customers needs and wants. As far as being up front with costs, we do it in writing. Yes, we are busy because of a well deserved reputation and referals. I'm sure the internet shopper considers our prices a rip off. Everyone is entitled to their wrong oponion. Peace Goodfellow, I will not be revisiting this thread so hopefully I'll save you a couple of hundred words.

The customer is doing you a favor by giving you the business. Never forget that.

I disagree, I'm doing them a favor by agreeing to do their project.

Actually, you're both right, but....

As with most relationships, personal or business, both parties must feel that they are benefitting from the transaction, or one or the other feels taken. Customers don't owe us anything until we perform, and the chance to do so is indeed a "favor" to us.

Keep in mind the other golden rule; the one that says that the one with the gold rules. We go to work for the money, which is a convenient way of bartering without having to find someone who needs our services and who also does or has what we need at the moment.

We have to keep up the appearance that we're grateful to them for choosing us. We often harbor thoughts we would never say out loud to the customer. We smile when we feel like scowling, and say "thank you" when we feel like cursing.

Why? Because the customer could easily have chosen a competitor, and there are plenty of them who are willing to grovel in a humble manner. My inner peace (my "wa") is serene enough that I can keep my grumpy thoughts to myself and be polite and gracious.

I do feel like the customer is doing me a favor, and I'm perfectly happy to express it to them. This attitude often leads to repeat and referred business, and even the occasional tip. I enjoy my profession, and rarely consider it to be real work, but I don't have to let them know that. Let them keep thinking that I'm just conscientious.

Larry
www.fineelectricco.com

I'll throw in one more opinion from a consumer.

No matter what profesion you are in, some ppl will tell you they can do it by themself via the internet or any other outlet.

I am a fee only financial planner and Investment Advisor. Tell me there are not a few hundred thoughsand people out there who think they can invest by themselves via the web and I can give you bunch of reasons why you shouldn't.

The bottom line is that there are ppl that are more than willing to pay for my service because they see the value. There are also ppl who want free advice, then run for the door. This is the same with any high end service including electronics.

There will always be ppl who could use your service but are not willing to pay for it for whatever reason.

I am a do it yourselfer by nature, I put in my own landscaping, pond, hardwood floor, deck, flagstone patio and finished my own basement (except for the mud work).

So when it can time to put together a home theater, I took the same approach. My leading factor was budget from the start. I knew that what I had to spend would not accomidate a proffesional installer so i did research via the web. Found the products I wanted, bought them locally, and installed myself.

I did not waste anybodys time at a high end shop because I knew I would not be purchasing anything from them. Did I run into a few problems, sure, but nothing I couldn't fiqure out.

Peoples feelings about their money is realy the driving factor here. Some ppl want something for nothing others will pay for value when they see it.

Unfortunatly, most ppl will not value your time.

Larry,...RickC
Well said.
CMack

Exactly right RickC. I do want to share a story about value. One of my first clients, about 6 years ago, hired my company to install wiring for a theater and whole house audio on a remodel he was doing. He asked for system quotes etc. and continually beat us up on price saying he could get components cheaper etc. 6 years later he hired me back to add some Crestron programming to the system we had installed. The theater looked pretty good and he had hired a competitor to put in the theater equipment (I know they're not cheap either, but I think he didn't want to give me the satisfaction of being right). Anyway, the moral of the story is, yes, you can save some money and maybe learn a few things by doing it yourself, but it could take 6 years. I think our value is that we take our clients rudimentary visions and turn them into reality in a matter of months. If your life expectancy is 70 years that can translate into 7% more lifetime enjoyment and it will turn out better than you can do yourself in 6 years.

I'm in the "custom install" (hate that term) business and I agree with this statement 100%.

First, as we are one of those "internet resellers" and also do local biz, we are on both sides.

Consolation: those same shoppers, are even beating us up on internet prices - demanding the lowest price in the world.

But to your point. I would advise this:
If you are trying to sell the hardware, and they throw a lowball quote at you, you can:
a. offer to split the diff in a way that is acceptable to you.
b. point out that of course you are charging hourly, and any delays, will cost them dearly. ie. if the projector comes in with a problem, bingo. They get their bill, for your time (minimum 2 hours) for being out there, and the extra trips as they have to send it back, etc. ie. if there's a problem, it ultimately will cost them hundreds extra, because of your extra time and trips.
c. Programmable remote: "We charge an additional $75 per device above programming time" to program any device that we don't sell. "we have to research the IR codes, etc..."

In other words, if they are beating you up for say $500 - $1000 on a system, they risk all kinds of minor headaches and bills that may well eat up most of the dif, and delays. And tell them that if they get the equip from you and there's a similar problem, you will not bill them for lost time because you can check out the gear in advance...

And get a deposit.

It is a lesson I have to learn over again every few years. And that is: The customer who beats you to death over the price, is ALWAYS the customer who has the most problems with (your) equipment (as he refers to it) and also generates the most unbillable service calls.

I don't know why it is this way, but it is. Perhaps it is a personality trait ingrained in this type of customer.

I had a customer tell me this week that he had found the $599 Yamaha receiver in my $2500.00 surround system proposal for $40.00 less at a dealer (Tweeter) 300 miles away and wanted me to match their price. He also kept saying that their "Dallas" speakers were cheaper than the Paradigm speakers in my proposal.

(I finally questioned him about the "Dallas" speakers and had to smile when his wife told him - 'no dear, the name was Boston'. He did not get the model numbers so I could make no comparisons.)

I reminded him about the services we offered and the time I had already spent with him in demos and education. I gently informed him that my prices are not based on what other dealers are offering. I asked him if Tweeter, 300 miles away, was going to travel here and connect and calibrate his system, and be responsible for service. He answered no, but still insisted that I match the Tweeter price - so, I nicely told him I would like to withdraw my proposal and decline the job. I walked away from this job, and I felt good about it. I had met this (type of) customer (personality) before and knew I would never satisify him.

You know, I fully believe that customers have a right to purchase equipment anywhere they choose. But don't come into my store and take up hours of my time getting educated and asking for demos and advice and then shop my proposal to a dealer in another city who offers nothing but price (since they won't have to install or service the equipment). Better to let those customers go and avoid the headaches to come.

It is also true that the customer to whom we give a $20-30K proposal, and who accepts it and is happy to do business with us - seldom ever has any real problems.





This message was edited by sndtowne on 12/25/02 16:17.08.

Ditto sndtowne, one other thing you might consider: we actually charge for proposals. We give price ranges for different things, but if the want to proceed further we take a retainer and bill against it to generate a proposal. It is very detailed including wiring diagrams and elevations. Once they have the proposal they can shop it to their hearts content it is now their property. Also the hours the spend getting educated are billed against the retainer. Getting paid for your time is crucial in this business.

Hi Thon,

You are right. Most of the time on larger jobs, we require a 1/3 deposit on acceptance of the proposal, with prewire billed against that. The job I referred to above was only a $2500.00 job. I had spent more time demonstrating and educating than it took me to type the proposal. We can't stand any hassels with a job that small.