Question

Topic: Strategy

How Flexible Should I Be? What Is The Limit?

Posted by ziczacxann21 on 8/27/2010 at 2:34 AM ET 125 Points
I have set up a pricing policy based on quantity. Customers who buy more will get more discount. And customers who make "payment in advance" can get more discount than those who pay "cash on delivery" and "credit".
However, a potential customer is taking me for granted. He want to order the minimum quantity but get more discount. I gave in becasue I wanted to start business with this customer. But I also added that he must pay in advance since I have already agreed to give in to his other requests. At first he said OK. But just before we deliver the goods, he said he won't pay in advance, but will give a cheque when we deliver the goods.
What should I do now? I think I have been flexible enough. I tried to make a win-win situation buy allowing him maximum discount but at lower quantity. I want to stick to the agreement of "payment in advance" because I think it won't be fair to other customers. I tried to tell him that I have given in to his request of the special disoucnt only becuase he promised payment in advance. But he insist to pay check upon delivery. This is only the first transaction, yet he behaves like this. Can I trust him? Or should I stick to my principles? I want to be fair to my other customers who had been following my policies.
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RESPONSES

  • Posted by mgoodman on 8/27/2010 at 6:45 AM Accepted
    It really depends on how badly you want the business. It's easy to say, "Don't give in any more. The customer sounds like trouble." But if you really need the business and believe the customer could ultimately become profitable (for you), it may be worth taking your lumps and giving in.

    The customer is simply testing you to see how much you'll give. If you allow the latest challenge, there will be more. So the issue is when you draw the line. And that depends how much you need his business.
  • Posted by CarolBlaha on 8/27/2010 at 7:24 AM Accepted
    you two aren't standing on equal ground. He's on top and that isn't what good relationships are about. He's treating you subverviently. I'd ask him do you want this or not. That you've gone far enough.

    Unless as goodman says, this biz is very important to you. And you are sure he'll actually pay for the goods with a good cheque.

    But question this new policy of yours if all you have to do is "ask" and you throw it out the window. You might also want to take a class on business negotiation. You can stand firm and retain the customer. They'll respect you for it.

    What's the Eleanor Roosevelt quote "no one can make you feel inferior without your permission."
  • Posted by telemoxie on 8/27/2010 at 8:18 AM Accepted
    Re: flexibility: I have found that in general, customers like to feel they're getting a special deal. A little flexibility can go a long way.

    Regarding payment in advance: when I was in business, I was paid in advance. I would estimate that I lost 80 to 90% of potential customers because I insisted on payment upfront. But, maybe I avoided a few headaches as well.

    I think a lot depends on what you are selling. For example, if you are selling custom countertops or something which is special ordered or something you need to pay for in advance which can not be resold to anyone else, then certainly it is necessary and reasonable to be paid in advance.

    On the other hand, if your product is more generic, you can be more flexible. If you do not have to put money out of pocket yourself, it might be quite reasonable for your customer to pay COD company check.

    if you can provide more information about the product or service you provide, your location, and so forth that we can be more specific and helpful in our responses. Good luck.
  • Posted by CarolBlaha on 8/27/2010 at 8:27 AM Accepted
    I hear you telemoxie -- but in today's tight credit-- payment in advance has become the norm. I am seeing companies with "good" credit having their lines yanked. I'm seeing competition dwindle to a few small number who are bondable and can get credit.

    I bet if you follow NuCo's (and my) advice-- hold your ground he'll give-- and buy. "A deal is a deal, do you want this or not?" He's pushing the poster around cause he can. And remember, you have no history with this guy. He might just give you a rubber cheque.

    You've got good buying customers that treat you with respect. Spend your time developing them. NuCo's right, this guy has been a pain from the start. Wait till the next time, if there is one.
  • Posted by ziczacxann21 on 8/27/2010 at 9:59 AM Author
    I'm selling consumer goods. I'm upset because i gave in to all his requests and i have only 1 condition for him (which is cash in advance). He agreed but now backed out. I wonder if i made a mistake by giving in to him in the first place. Perhaps if i was firm from the start this wont happen. Anyway I ignored him for 1 day and now he's calling me 3-5times trying to convince me to trust him and that he really wants my products. He said he's afraid we'll cheat him if he pays in advance!
  • Posted by CarolBlaha on 8/27/2010 at 10:14 AM Member
    I smell a rat. Trust works both ways. So you should have trust and he is allowed not to?
  • Posted by CarolBlaha on 8/27/2010 at 11:26 AM Member
    Youre right NuCo-- why is he putting all this effort into "convincing" you he's trustworthy?
  • Posted by CarolBlaha on 8/27/2010 at 11:34 AM Member
    Think of it this way. He's already backed out of what he agreed to. His short history with you already shows the little value of his word-- his trustworthiness.
  • Posted by mgoodman on 8/27/2010 at 12:18 PM Accepted
    How about this:

    You: Let's start this all over. Here's the price, and here are the terms. (Give him the list price, with standard terms.)

    Customer: But you agreed to give me the volume discount price.

    You: Yes, but you agreed to payment in advance.

    Customer: How do I know I can trust you to deliver if I pay in advance?

    You: The same way I know I can trust you if you don't.

    Customer: Does that mean you won't honor your original price?

    You: Just this once I will give you the discounted price when you don't meet the volume requirement, but payment must absolutely be in advance.

    Customer: I can't do that.

    You: Then I'm afraid we can't do business together. I'm sorry about that, but I also have a business to run and plenty of customers who want my products and are willing to pay for them according to my standard terms.
  • Posted by michael on 8/27/2010 at 5:36 PM Member
    If you have a collections department, they'll have a customer for life. Otherwise, don't deliver the goods.

    Michae
  • Posted by Chris Blackman on 8/27/2010 at 9:05 PM Accepted
    You had what you thought was an agreement and before the ink dries the customer is changing everything.

    Michael Goodman's suggestion (this thread at 8/27/2010 11:18 AM (CST)) is perfect. It sets the agreement back onto a solid footing, for either of you to accept, or to walk away.

    Maybe you should reword your agreements so that if someone doesn't keep up their side of the agreement, there are consequences, like missing a payment date means there is interest to pay, a higher price becomes effective, or a discount is removed... Much like the old "$100, or if paid by x date, $95.00" on an invoice.




  • Posted by cookmarketing@gmail. on 8/29/2010 at 7:09 PM Member
    Answer - put it on his Credit Card (CC). He'll get Net 30 days and you'll have cash less (CC) fees.
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