Pricing - Profits and 'fair value'

Abe asked a good question yesterday - that started me thinking of the issue of pricing in a ‘bigger picture’. Abe’s question had to deal with what can one do to ‘match’ a price.
Lets look at this from several sides:
a)-if this is a one of a kind or limited impact - any person who thinks of themselves as a senior staff member can do what they feel is in the best interest of the store. You are on profit sharing and know the impact of doing or not doing the action. Do we lose a customer? Is it a fair price comparison, or something that is an un-fair comparison. Can the price be confirmed? We do ask that you clearly mark the invoice as “PRICE CHAGE TO MATCH COMPETITION” …. So if this invoice ends up in one of our INSTALLER customers – they will understand why their customer got this price.
b)-a harder question –this price quote might be for a line that ‘is changing’ and we need to also change with the times. It might mean we have to source from another supplier or another line from that supplier. In these cases it is IMPORTANT that you send the feedback to your manager and he discuss with other managers and myself of a future plan. We also want to make sure this feedback extends up the chain to our supplier to see if they have an option. Clearly – the impact of CHINA has had a huge effect on the value of products ( to name just one example). These decisions may take some time –so REPEAT any info your encounter again ( and again). Never give up!

We need to show the customer that we give him good value. Some customers could be reminded of the full service, fast special orders, good warranty coverage …etc etc … but some customers are just driven by price. How do you make your decisions on what YOU buy? Got that great deal on a TV only to find out the store sucks on service or warranty? In some cases we can’t match the price – and the selling company often pays the price by going out of business. Find an old phone book and look in the yellow pages – there are many examples of companies that just faded away – a company has to make profits in order to survive and continue. A company that ‘low-balls’ and is out of business after 2 or 3 years –doesn’t do anyone any service.

Start-up companies or companies under-going a new owner may provide ‘temporary’ low prices and in 6-12 months jack the prices up …usually in order to survive. There are many examples of this practice. Unfortunately the other competition must endue this stupidity until the start-up gets their first financial statement and reality sets in. In some cases they run out of money ( cash flow crisis ) prior – but for others …it just takes time … to realize they don’t have a sustainable business model.

Treat the customer like you want to be treated. And remember -- their comments are important to us all …. This is how we learn where the market is going. Please IMPROVE your communication skills on how you pass on the market pricing info to your manager and encourage him to make a point to see that he discusses these points with the ‘manager team’

Together – we can make a difference and get our customers the best value they deserve. If anyone needs another cope of the business book we encourage you to read ( Up Against the Wal-Marts -- see Greg to get your copy --well worth the effort to learn and become smarter)
Greg H 11-06


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