[TrickyDick]

So this morning my partner met with one of our maintenance clients to talk about this years contract. This is one of our older clientsand has always been considered one of our best as well. He has always felt the need to "negotiate" his contracts but has mostly been fair about it. It's like a little game but over the last year or two it has become noticably worse. We have felt that he appreciated the level of service that we provided, unlike some of our other clients, and all in all it has been a good relationship. Last year we gave him a discount of around 10% on his 30k maintenance contract because he basically handed us a decent sized commercial installation contract with no bid.

So this morning he decided he was entitled to a 20% discount and was apparently unswayed by any sort of reason. His reasoning was that he is "giving us" his new property where his new house is currently being built. It is 4 times the size of his current one and the install will probably be well into six figures. However that may not begin until 2008 as they are just about to start construction. My partner left with it unresolved and neither of us really know how to deal with it. We can't really afford to throw away the kind of work that will be coming from this guy over the next year or two but I don't think we can afford to do 5% of our revenue at break-even or worse either.

I'm pretty pissed off and insulted by the whole thing. Working for these a--holes is at least tolerable when you feel like they value what you do but on days like this I start to feel like there's not a lot of fullfillment ultimately to be had in giving millionaires pretty gardens- and there damn sure isn't that much money in it.

Anyway....if there were only this one contract at stake I would definately take a hard line on it because but this client could be worth

[TrickyDick]

don't know what happened there.


could potentially be worth 200k or more over the next two years. Don't really know how to both maintain this clients business and stop what appears to me to be a downward spiral of cheapness. And believe me the whole thing is a game to him...it's not about money.

[agla]

Ask for a deposit on his upcoming job and with that, give the discount. Then see who blinks.

[Dale Wiley]

and don't you blink first...and

He who speaks first lose's.

[Stonehenge]

Originally posted by agla
Ask for a deposit on his upcoming job and with that, give the discount. Then see who blinks.

That's what I was thinking. Get a commitment on the promised work first. Then you can breathe a lot easier offering the discount. And then tell him that if he brings you $500K in work the following year, you'll give him a 30% discount!

[agla]

Go one step forward. Write up the two contracts together in a very matter of fact way as if it is expected. Then you can act surprised when he reacts as though he did not expect it. That puts him in the position of looking like he is backing out of the deal if he does not come through. Seems like it would be fun in a warped sort of way.

[yardguy]

I agree w all, if you really feel this is a "game" to him, then put your best interest first and play right along w him!! I would def ask for a deposit or the signing of a contract on the "promised" future jobs.

[TrickyDick]

Too late. It's done. My partner talked to him again and pretty much told him that we were pissed and feeling like he didn't value the level of service he gets from us enough. Client was apologetic and said how great we are blah blah blah but that he really thought he should get his big discount because of all the work he's giving us without a bid which is fine except that all that work will probably not start until next year at which time I would be happy to give him a discount. They agreed on a price that was slightly better for us. I think the whole game is BS- people don't give us work without bidding it out because we give them discounts, they do it because we're good and because we go way out of our way to get things done for people when they want them done. But this client is a developer. He's gotten very rich by getting contractors to play the game his way so I guess we will to. In the meantime we will make sure that every T&M hour on his other place will be rounded up. What baffles me is that people think we pull these numbers out of our butts. Obviously if I have to take a 20% hit on on 30k I'm going to do what I can to get it back somewhere else. Nobody really wins when you play these games. The work is worth what it's worth.

I don't doubt that we will do the work and I also have no doubt that it will be extensive and expensive. The LA he's working with had her own contractors she wanted to bring in and he was pretty clear with her that we would be doing all the work. The guy's a dick but at least he's been loyal.

Thanks for the suggestions.

[Nebraska]

The downward spiral will continue.

[familyguy]

Reduce the service. That is probably the best answer. Any time someone wants to pay less they really should get less.

This particular job requires 250 Supervisor/Owner hours at $40 p hour, 425 general labor hours at $33 p hour, and 45 hours ZTR + operator at $45 p hour.

(Thanks to Dale I know what those numbers are now)

So, we should reduce the job by the 17% or 18% that the revenue was reduced by. Went from 31K to 26K. Last year we settled on 27K so we are taking a year to year hit of 1K (now, at first it was more)

Last year he handed us a 50K, no bid contract at a very high end visible location. So, we gave him a discount. We can all agree that if ever there are reasons for discounts, that is one of them.

The other reason he feels so entiutled is that he has added a 4 acre property to our maintenance work. (The one he is renovating for his new home) So he feels he needs to get a volume discount. That is pretty common as well.

So, ultimately, I am pretty sure that you would all take your lumps and pony up with the discounts as well.

HOWEVER, the part that really is pissing Tricky and I off, is that for 2007 we have to make up this idfferrence. We have no idea what this work is that we doing in 2008, so we are handing him a discount based on a guess for 2008.

Agla, Dale, I am pretty good talking to rich demanding folk as I have been doing it pretty consistantly and well for 7 years with our customer base. This particular guy would melt my brain. He is older and far far more confident in his having the upper hand. He also is respectful of our crew. He knows each one by name and introduces himself to the new ones, after he sees em for a few weeks. He has a manner that earns his respect and really shows a great deal of loyalty to us. He made it very clear to his builder and LA that he had a landscaper and needed to have them discuss plans with us before they were finalized. 95% of the time he is simple to deal with.

Basically, he is a pretty demanding client who we have an easy time dealing with (usually) because we are very good at producing results for demanding clients.

The issue is, underneath all of this, that we are simply not a large enough company to look at an oncoming entire 4 acre renovation and risk losing it because we wanted to squabble over 18% on a much smaller job. Especially considering the guarantee of the oncoming workl.

The future main concern is.... what are we going to need to negotiate for the property renovation???? Sigh...

I wonder if McDonalds is hiring.

[agla]

That makes sense to me. But the key is what you said earlier on. He hires you because you do good work. He squeezes you because he is a business man and he tries to squeeze everyone. It does not necessarilly mean that if you don't reduce your rates he won't keep you. But once you do it, he knows you will do it and he will try harder.

When I went to work for the highest end design/build that I ever worked for I ran into some "negotiators" early on. I went to my boss and said "this is a big job, but he wants us to cut back the price". My boss told me this: "Our prices are based on what it costs to do the job and a reasonable profit. They are what they are and are not fuzzy or padded. We can reduce quantities or sizes of material and that will bring the price down, but we can not just simply hand him back money. Our prices are not negotiable" I went back to the client, a high powered attorney, and told him that. He prodded afew more times thinking he could get me to bend (I would have, if it were up to me - I would not now). To my surprise, he went with us anyway.

From that point forward, I have never negotiated a price by any other means other than reducing services or quantities, or sizes. Not only do you get your price, but the sales process is much quicker and less work.

[Stonehenge]

Originally posted by agla
"Our prices are based on what it costs to do the job and a reasonable profit. They are what they are and are not fuzzy or padded. We can reduce quantities or sizes of material and that will bring the price down, but we can not just simply hand him back money. Our prices are not negotiable"

I more or less tell our clients this same thing, but in our market, $100-200K jobs don't really exist. So it's a lot easier to assert this when it's for a $5-$10K job, because there isn't so much money riding on it.

I can see where it'd be a lot harder not to bend when the zeros started stacking up.

[Malrex]

I'm really new at all this and the newbie of the forums but for what its worth:

I think you guys did the right thing. I would of done the same thing...be honest with the client but plant my feet. I personally don't (and don't plan too) play games. I would rather exert the effort on finding a new client than the effort to play (stressful)games. If the client is really happy with your work, then in my opinion, they will realize that they are in the hot seat and could potentially lose some good workers and service.

[TrickyDick]

The downward spiral will continue.

Exactly.

[VoodooChile]

I don't understand how anybody can offer a 30% discount on a 30k maintanance contract with the justification that we will make it up with other work, next year...

100k, 500k, those are big gross numbers, but also much more difficult to manage and make profitable. That is, there is no assurance you will make up that 9K with other larger projects for this guy.

And if this guys expects you to give away your profit (and then some?) on a 30k maintainance contract, what is he gonna want you to give up on an install worth half a rock?

Threads like this make me glad I'm still a small small business.