I read a pretty interesting post on the Lost Art Press blog today regarding saying “no” to a customer. Well actually, the post referenced the interesting post, which was written some time last week. To summarize, a customer who had placed an order asked for a discount when coming to pick up the order, even though they had already agreed to a price. The owner not only refused to offer a discount, he also refused to sell the piece at the original cost. The moral: If you aren’t going to compromise in your work and its quality, you shouldn’t compromise in the value. Well, maybe that isn’t what the author was getting at, but that is what I think he is getting at. Do I agree with it? That depends.
In my line of work, first as an electrician, and then in the sales of electrical services and goods, I’ve very rarely come across a situation where a “discount” didn’t need to be offered, and often times that “discount” is offered without being asked. When bidding work, the basest rules of sales should be the first consideration: Know your product, Know your customer, Know your competition. What does that mean?
Knowing your product doesn’t only mean that you should know how long it will take to produce and what it does and what makes it tick, it also means knowing the value of it. It means knowing how much it can be sold for profitably.
Knowing your customer means building a business relationship with your client. It means understanding what your customer’s needs are, and how quickly he/she needs it, and it means knowing what your customer is willing to pay.
Knowing your competition, that’s the most important rule. What can your competition do that you can’t? Can your competition deliver comparable material for a better price? Can your competition provide the service more quickly? Is your competition flat-out better than you? These are things you need to know and understand. These are things that many “professionals” still don’t comprehend.
That all being said, the shop owner who refused to sell may have been in a situation where he could afford to pick and choose his cliental; that part of the story is unknown. If he is in that favorable situation, more power to him. Where I live, the competition is far too fierce to refuse work, and more importantly, refuse profit. There are some people that get insulted when asked for a discount, and maybe for good reason. Maybe the piece he was selling already had a very fair price, and a discount would have decreased the profit so much as to make the item not worth selling. Or it could be the other way around, and maybe the customers saw a similar product that was cheaper, and the shop owner was overvaluing his product. Or maybe it was a little bit of both. As I said, not enough of the variables are known to even make a guess.
Here is what I do know, most craftsman overvalue their work, and most buyers undervalue the product. Case in point, my dad happened to stop by my house last week and commented on how nice my cupboard looked. He mentioned that I should sell it when it’s finished. I wouldn’t sell it, but what cost would I ask if I did consider selling? To use round numbers, I would probably be looking for $950-$1000. I came up with that number taking into account the materials cost, time spent, tools/skills needed, and the desire to make a profit. Most importantly, I came up with that number because I’ve seen them sell for twice that price and more. At the same time, I’ve seen similar cabinets sell for $500 or so. My number may be unrealistic, or it may be a great deal; I’ve seen indications that both notions may be correct.
My dad, on the other hand, would tell me to sell the cabinet on the high side, somewhere in the $1500 range, which is what most individual furniture makers are charging from what I can tell. Yet at the same time, my dad wouldn’t pay more than $500 for one in the store. And there lies the dilemma. A professional salesman needs to know what to charge. A professional needs to know that Customer “A” may pay $1500, and customer “B” may only want to pay half that; the good salesman knows how to sell to both. Because that is the only way you stay in business and earn a living. Telling customers “no” doesn’t fly in my world, and neither does giving it away. Figuring out a way to say both “no” and “yes” is how you prosper. At least, that is what I’ve learned.