YOUR PROSPECTIVE client says, "The other guy can do it cheaper!" What do you say?
Holding the line on prices when bidding for business often requires a rental supplier to be part psychologist, part diplomat and part riverboat gambler.
"Don't be afraid to hold the line" when you know your products and services are worth it, says Bob Traina, president of Peterson Party Center in Winchester, Mass. "When a customer gives us a competitor's price and it just doesn't make economic sense to us," Traina says, "we politely tell that customer we could not maintain the quality of our service and our product if we agreed to meet that lowered price expectation."
He explains: "For a recent five-day event in Brooklyn, one particular catering company had a quote 15 percent less than our bid. We simply told the client in all honesty that we couldn't give the level of quality and service they were accustomed to from us if we had to meet the lower price."
A lost job? On the contrary, reports Traina; showing integrity about your pricing actually works in your favor. "The client called us back and said they felt more comfortable having us handle the project at the price we quoted them."
It's important to bid on a level playing field. Make sure the requirements your customers ask of you are the same requirements they are asking of your competitor.
"If somebody shows us pricing that is disproportionate to our bid-let's say 30 percent cheaper-we won't hesitate to ask to see a copy of that quote," says Matthew Fitzgerald, customer service manager for Chicago Party Rental, a 32-year-old firm based in Countryside, Ill.
SELL SERVICE Don't rely solely on the attractive price quotes on a page to persuade your customer to do business with you. Says Fitzgerald: "We stress the service level we provide as part of the package and how things are handled. Our commitment to service is probably the No. 1 factor that sways a customer to perhaps pay more by contracting for our services than deciding just by price alone.
"The Chicago market is like most others in that there is good, healthy competition," notes Fitzgerald. "But it's been our experience that people are willing to pay your price if you give them exceptional service. It's certainly worth something to have the party or event serviced and handled correctly."
Show the customer the "added value" of doing business with you and price often becomes a secondary consideration. Fitzgerald recalls a recent project for a major food processor: a three-hour barbecue for 3,500 people.
"They were going to hire us for some things and another company for something else. Our price was a small percentage higher than the other company," he says, "but our pitch to the client was, 'Let us do everything for you this time. Get it all from one place and save yourself time and paperwork.' We were able to show the customer the value of dealing with only one vendor. And when you save people time, that's money!"
Remind your customer that the lowest price may not be the best deal. "Everybody seems to think the lowest price represents the best value," says Bob Britt, chairman of tent manufacturer TopTec, based in Simpsonville, S.C. "But that's not necessarily true."
Added safety features, for example, often cause products to cost more, notes Britt, and it's your job to help customers understand that fact. "After all," he says, "what do you have a party for but to have fun and enjoy yourselves at a memorable occasion? But if an injury occurs because of slipshod materials, well, that's not fun."
Britt points to the inflatable bounce rides manufactured by TopTec subsidiary FunTec as an example of how high-grade materials and attention to safety influence price. He explains: "Other rides use netting, but we employ a mesh that children cannot poke their fingers through, which avoids twisted fingers and joints. Our doors close with clasps rather than Velcro, so children won't bounce against the door and fall outside. We also have roofing, so they can't crawl out of the unit and hurt themselves. As a result, our product is not the least expensive on the market, nor do we want it to be. We know that people will pay extra money for added safety features once they understand how these additions affect the price."
ANALYZE THIS Be prepared to educate your customers by countering their requirements for a project with what you believe they actually need. Says Tom Gifford, general manager of Burbank, Calif.-based Abbey Event Services: "When you look at specifications for any project, you're looking for two things: first, what the customers think they are asking you for; and, second, what you think they really need to accomplish their event, based on your knowledge and experience."
Gifford says that "by first figuring out the best way to do the project and then doing the pricing, you can start an open discussion with your client and compare your pricing with other bids he may have obtained. We've found that this way we don't get beat up on price."
Gifford says his firm is successful at closing the deal "because we put together a great presentation, one that's very thorough, that foresees elements the client may not have thought they needed. This impresses them with our professionalism before they even get down to the price line."
He explains: "We took a big job away from a competitor last Christmas for a party at one of the movie studios because we went in and looked at the site, diagrammed it and gave a detailed analysis to the client with our recommendations. Now, the other company would have gotten to that point, but we did it first. And because our bid demonstrated everything so completely, we got the job."
When customers question a difference in your quote from a competitor's, be sure you're talking about the same product and level of service. Says Gifford: "We'll quote $1,200 for a tent and the client may counter with, 'The other guy said $800.' We then explain that we added in $300 for a permit, and that's why there's such a big difference. We're only $100 higher-not $400 higher-than the competitor. Then we ask, 'And by the way, were the other folks going to charge you the permit fee later or work without a permit? Well, we don't work that way.' Don't let your customer be pennywise but, ultimately, pound-foolish."
PICK UP PIECES Customers are often attracted to package prices, but the opposite strategy can also work in your favor. Gifford notes: "It's certainly a price advantage to get a lot of stuff from under one roof. But when a price-sensitive situation develops, sometimes it's the best decision to let subcontractors deal directly with the client for that particular item.
"Let's say your party needs a $5,000 tent and $5,000 in rental equipment. I'm making $500 on the tent," Gifford says, "but the client sees the $10,000 bottom line and says, 'Hey, too expensive.' So I'll separate out the tent and let the client deal directly with the tent people. Now my bid is $5,000, so it doesn't look bigger than it actually is. Also, the client often can save a little money dealing directly with the tent supplier, because I have to mark up the tent if I handle it and the tent supplier doesn't."
Should you respond to faxed quotes challenging you to do better? Gifford recommends a face-to-face meeting with a prospective client. "I want to be sure they're asking for a real bid, and not just asking for my quote so they can go back to the other guy with it and drive down the price."
Know the worth of your product, don't be afraid to walk away from customers who buy strictly on price, and draw up thorough quotations that dazzle the client with your quality, ability and professionalism. Then you will prove to your client that your price is right.