Jun
26
    

Bye Bye, Customer

Posted (Stonehenge) in Business, Sales and Marketing on June-26-2008

Things were moving along too easily.  We had our initial meeting, where the client had provided copies of two different (self-made) designs for a patio he wanted built.  You know how sometimes you just click right away with clients and other times you clunk?  This was a bit of a clunk.

But even so, after I’d emailed the price for the designs, I got a call back with an indication that we were tentatively a go.  Just send over the paperwork and contract terms.  Cool.

Then I get the email.  The bullet points were as follows:

1.) We would like the pricing to include the wrought iron railing which would bring the total to $14,472.00. Can you let me know what type of railing you’ve quoted and if there’s a website or location so we can look at our options?
No problem so far.
2.) We would like to modify the percentages for payment. We would agree to 10% at the time of acceptance, then an additional 30% to be paid on the start date, and the remainder within five days of completion.  If you agree please modify the PAYMENTS portion of the Contract Terms

Um, say what?  Those terms were put in place because of our experience with an extremely difficult customer.  A customer this one is beginning to remind me of. Warning alarms were beginning to sound in my head.
3.) We cannot agree to the ESTIMATES portion of the Contract Terms. Please delete this portion from the Contract Terms.
Uh oh.  I was getting that sinking feeling, like something that was mine was slowly being pulled from my hands.
4.) We will need a signed lien waiver before sending you the final payment.
Not unreasonable, but after numbers 2 and 3, any additional requests are just more red flares being shot into the air, warning me of this client.  Crap.  I had this one in the bag.
5.) We will need to get a copy of your certificate of insurance and a certificate of liability or proof that you have workman’s compensation before being able to proceed.
Whatever.  It’s over now.
I sent an email back explaining that I might be willing to budge a little on percentages at the three payment points, but that I would not leave 50% or more of a project’s price uncollected until the project was completed.  He explained that a competitor of mine was willing to accept 20% down, 80% on completion.  I explained that I won’t adjust my approach based on my competition (and wanted to add that if a competitor wanted to play ‘bank’ while they were building this client’s project, that’s their business).
A few days later I received a final email; the client informed me they had chosen another company for the work. I hope the other company doesn’t lose their shirt on this one.  Uh, well, maybe I do.

Comments:
doug70 on July 27th, 2008 at 10:29 am #

The percentages for payment can be hard to work with. My contract is extremely similar to the one you posted. I doadjustthepercentages hereand there, especially when there is a lot of prep work to be done before very expensive materials show up -so the first day payment has become more flexible. I’ve added more payments as materials are delivered. but total outstanding never gets too risky. Just my my way of handling the sticker shock- 70% paid on the first day of a three week project often becomes a point of discussion. I don’t get paid for discussions. The last page of my contract is now a payment schedule. That’s new this year. It’s a good tool for me. Part of it is a game, but it makes sense to the customer and keeps me paid up.

I know you were blogging about the difficult customer, but I wanted to throw that in now that we are in cut-throught mode out there.

I am using a lot of your contract - THANK YOU. I have a line in my ESTIMATES section that says I will communicate changes in pricing in writing and await customer response. To be honest, I haven’t had any problems in that area. The contract gets signed and work proceeds.

I do pull out the change order or additional work form a lot. That’s where I save my butt(margin)and make some decent money.

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