Dealing with customers

[JS]

If the government will pay $30K for a toilet seat, they'll pay good bread for the 50 cent part.

I remember getting one of those calls from the navy, only one problem, the place the purchasing agent was looking for burned down....

 

[CarbideBob]

Really? So no material markups, or sourcing any industrial items for clients who dont have accounts with those suppliers, and all consulting must be bad?

That a very valid question. Some see any added on as a rip off.
It costs me money to not only process a incoming PO and payment but issue a PO to the supplier and pay it. The office is not free just as is not the work on the floor.
Repack and ship no cost?
There is work done here by somebody.
Now.... if some steps or person (me) can be skipped the work or all costs get lower. I hate to see this, makes me feel dirty.

If this seen a favor or not depends on the customer and sometimes the customer will pay a tad more for convince or some tech help.
Strange here is that somebody in this forum I have sold too falls into this category.
Bob

 

[Arclight]

It's worth noting that some of those "$500 hammers" cost that much because contracting with the government can come with all sorts of weird strings attached. They might want a 5 year warranty on a piece of electronic equipment that will no longer be produced in a year. Or a contract will require the vendor to keep X number of units in stock at all times, with no obligation to buy them. So it might only be worth selling certain things at a huge markup if they insist on moving so much risk to the supplier.

We all agree that you should be paid for the use of your time, equipment, building, etc. But risk is something that has to be compensated for as well.

 

[jscpm]

Just give him the vendor info. You are not a var/reseller/rep, so you are not supposed to be making money from referrals anyway. One of the golden rules of good business is: only charge people for exercising your profession. If you do some little piece of work that is not your regular business, then it is a favor.

Really? So no material markups, or sourcing any industrial items for clients who dont have accounts with those suppliers, and all consulting must be bad?

In my experience an area where small business owners frequently make errors. They do something that is out of their bailiwick and then wonder, "How do I charge the guy for this?" It's one of the oldest principles of business and goes back to medieval times: Don't do stuff that you are not in the business of doing, and if you do do stuff you are not in the business of doing, don't try to charge for it. It's a favor. If a doctor stops to give a stranded driver a jump, he doesn't try to charge the guy $400 for using up 30 minutes of his time. That's because he's a doctor, not Triple AAA. He is not in the business of giving roadside assistance, so if he does, then it's a favor.

As for material markups: DON'T DO IT. It's sleazy and unbusiness-like. Are you a steel dealer? No, you are a machinist. Trying to hide profits in "shipping and handling" and material markups and things like that is unprofessional plain and simple. I used to know an executive at Princess House, a company that sold "collectible" dinnerware and memorabilia. He bragged to me that the most profitable department of the company was "shipping and handling". He thought they were being shrewd, but they were just being dumb. Princess House is defunct now and their products are as worthless as their business model was.

Real businessmen charge for their business and nothing else.

 

[Plane Parts]

Then tell him to go find the guy that will do it for 50 cents. You don't need to waste your time with a purchasing agent if you are a tiny little shop. And you especially don't want to waste your time with someone who doesn't appreciate the skills and machinery you have.

 

[gregoryd]

Eh - you were given a spec and asked to deliver a part to that spec. It's your choice if you want to make it from scratch, or source it already made. You said you are a fabricator, but I bet there are times that you have to do some design. I'd make a line item for your design time and charge that out on this instance, and also when someone comes at your with specs that are not all figured out yet.

Lots of companies sell parts that they don't make as replacement parts for their product with their own special number. O-rings are probably the biggest! I've bought JCB parts that ended up being parker parts in JCB boxes. Most of the hydraulics for earthmoving equipment is this way.

 

[john.k]

Other people dont work for nothing......I recently had to get a letter from a income tax accredited accountant about my tax exemption.....A very simple application of the rule that land bought pre 1985 is capital gains tax free.....to be handed to the buyer exempting me from witholding payments.......One line on a letter head,which he printed out for me while he told corny jokes.....$450.00 for letter.......The lawyers who handled the whole sale ,including putting the money in my bank charged $770.00.......And just because I bought the land for peanuts 40 years ago ,everyone thinks Im glad to be ripped off ....(The land was cheap because it was next to the toxic waste dump.)

 

[Bondo]

When things like this happen to me, I now just tell myself. It is just another one of those business days. Meaning that this decision could change the way the business or money flows.

I work in a real PITA industry where people plan for months but want a 2 week job done overnight with 10 reasons why it cant be done but still needs to be done because we were lazy about it.

After years of learning how to handle situations like this, and not knowing your particular arrangement with you customer, I would state it like this.

I thank you for thinking of me to make these parts for you. I quoted the parts but they would end up being X each, if I made them. Since I understand my industry and wanted to save you money, I spent 4 hours researching it, and found a supplier for these parts. After finding it all out, I marked up the parts, $X each which comes out to $X for the total. It is still a huge savings of X. If that doesn't seem right to you, then you are welcome to find the parts yourself. When you do, just remember that these parts are made from bronze not brass (or just a simple very obvious tip for someone in the industry but someone wont understand who isnt).

This is a very polite way to turn the "it is another one of those business days" into, your next email will determine whether or not you are still my customer, and I will be thankful either way.

Sent from my SM-G960U using Tapatalk

 

[SIM]

When I am asked to quote a part I am sure is available over the counter I mention that to them. If they still want a quote I quote in numbers requested. If I see a quantity break somewhere I'll toss those number into the mix as well.


If I know how to locate the part quick, I may offer to buy but I add 10%.

If I know its available but can;t seem to find...that is not my job and toss back in their lap.


When told my $20per piece part can be bought at .50, Sure,maybe...but I was asked to quote and make within my means.


Hey, its a figure out the way to make, program, setup, proof and make. Could be 2, 3 4 or more separate operations each taking time. When I quote I can explain why the costs are what they are...I have no issue with a customer questioning me on prices. I do not charge "What the Market Will Bare", that is not MY way of doing business. Nothing wrong with those that do.

Anyway...I can always show where the cost derive from. Special tool, machine, setup, extra cost on material.


All that said, my part is $20 and this one you used to buy was .50. IS it possible? Maybe...Get an order for a million of them, have casting made to net size and production tap a hole or two.
Million parts and run in a transfer machine and deal direct with the mill...The per piece price drops drastic. OR can.

But I do not have that order, nor that casting, I just the machines on my floor. Here the price is $20 each...order 100 pieces it will most likely drop in cost...order 1000 etc


I guess I'm saying I'd go the route of trying to educate the customer...IF they are willing to learn. I also like lazy customers as I found if I do their job well enough, they get the pat on the back for the great work and I get the work.

 

[Rewt]

Not just the gov't. My company has a list of approved vendors. If you need something from a vendor not on that list, we have one company that makes a quick 15% just by brokering items for us. That company is on our list, the other company isn't, we order it, he applies his 15% "handling" charge for some thing that sits on their warehouse floor for 1 day.

One item that comes to mind is some specialized mill tooling, and we order in lots that run around $5k, about once a month.

Can't even get the procurement guys to even think about adding the other company to the list. "We have too many vendors on the list already."

It's straight up moronic.

 

[johfoster]

If a doctor stops to give a stranded driver a jump, he doesn't try to charge the guy $400 for using up 30 minutes of his time. That's because he's a doctor, not Triple AAA. He is not in the business of giving roadside assistance, so if he does, then it's a favor.

Huh? Try calling your Doctor during office hours and asking him to come give your car a jump...

 

[Mud]

Just give him the vendor info. You are not a var/reseller/rep, so you are not supposed to be making money from referrals anyway. One of the golden rules of good business is: only charge people for exercising your profession. If you do some little piece of work that is not your regular business, then it is a favor.



In my experience an area where small business owners frequently make errors. They do something that is out of their bailiwick and then wonder, "How do I charge the guy for this?" It's one of the oldest principles of business and goes back to medieval times: Don't do stuff that you are not in the business of doing, and if you do do stuff you are not in the business of doing, don't try to charge for it. It's a favor. If a doctor stops to give a stranded driver a jump, he doesn't try to charge the guy $400 for using up 30 minutes of his time. That's because he's a doctor, not Triple AAA. He is not in the business of giving roadside assistance, so if he does, then it's a favor.

As for material markups: DON'T DO IT. It's sleazy and unbusiness-like. Are you a steel dealer? No, you are a machinist. Trying to hide profits in "shipping and handling" and material markups and things like that is unprofessional plain and simple. I used to know an executive at Princess House, a company that sold "collectible" dinnerware and memorabilia. He bragged to me that the most profitable department of the company was "shipping and handling". He thought they were being shrewd, but they were just being dumb. Princess House is defunct now and their products are as worthless as their business model was.

Real businessmen charge for their business and nothing else.

Just to be sure I understand your point, can you give us an example of when you apply this? Something a customer has asked you to do, and you did it for no charge?
What business are you in?