Should you compromise on price?

A man is getting dressed for an interview and after putting on his suit his wife suggests that the brown shoes will look the best. He disagrees. He thinks the black shoes will look better.

They compromise and he leaves for his interview wearing one black shoe and one brown shoe.

Ridiculous right?

Silly as this example might be, it illustrates nicely that compromising is often the worst of the options.

Yet we always think of compromising as the fairest and best way to resolve a negotiation.

Truth is, that is rarely the case.

So, how does this apply to business?

More specifically, the business of being a painter and decorator.

Well, let’s say you are quoting for a contract and negotiations are underway.

The customer wants a cheaper price and you want the work.

Common negotiation philosophy dictates that you should never simply discount without reason.

If the customer wants a cheaper price, then they must concede on something too. There must be compromise.

For example, if they want a cheaper price, you may suggest that to do this you’ll have to cut down on the level of preparation or use cheaper materials. It means the finish won’t be as good as it could be, but it’s a good compromise based on the customer budget.

Sounds like a reasonable way of doing things, right?

Well, not exactly.

You see, this negotiation has led to the customer paying slightly more than they wanted to, and you are doing work to a slightly lower standard than you would like.

This is the metaphorical one brown shoe and one black shoe.

Nobody is really getting what they want, and nobody is 100% happy.

This is a problem.

A problem that could manifest itself in a number of ways.

Let’s say you get the job.

Shortly after starting, you will become frustrated with the limited budget.

You will feel that you can’t offer your best service for the price you negotiated.

But you take pride in your work.

You don’t want a reputation for doing substandard work.

So, what do you do?

You go above and beyond to deliver the best possible job for the customer.

You complete the job to a brilliant standard as you usually do. The only difference is you’ve made very little profit.

Does the customer appreciate all the extra effort you’ve gone to?

No.

Do you know why?

It is because all they were focused on was the price.

So, they begrudgingly pay you (probably a little later than agreed) and you walk away pissed off that you’ve gone above and beyond for a customer and they’ve shown no appreciation.

‘Some customers will never be happy’ you mutter to yourself.

Does this situation sound familiar?

More than likely you will be saying yes!

This is a universal problem faced by all types of service based businesses.

So, what do we do to solve this?

Well, you have two choices.

  1. If someone doesn’t want to pay full price, then you deliver a substandard job to fit the budget.
  2. You never split the difference. You decide that if both you and your customers are going to be happy; they need to work to your budget. If they can’t afford you, that’s fine. They wouldn’t have appreciated you anyway.  

Personally, I like to go with option 2.

What do you think?


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