Curbing Price Quote Chaos —Morgan
We asked a similar question to our suppliers: “How often, if ever, do you offer to lower your price when you find the initial price you quoted to a customer was too high?” Surprisingly, 70 percent of the print suppliers said they occasionally lower their price quotes if a customer asks them to do so. As one supplier stated, “If it is a good client and they need help to stay within a budget, we will lower our price. Or if a prospective client wants to use us, but can’t justify the higher price, we may adjust it, taking into account the potential benefits (potential volume, profitability, etc.).”
The inherent problem with this method is that buyers begin to believe that suppliers are taking this cut out of their profit. Which brings us to…
Profit Misconception: In January, we asked major print buyers, “How much net profit do you believe the average printing company makes?” Almost 80 percent of the polled respondents said they believe printers are making more than a 7 percent net profit.
Because print buyers assume printers are achieving much higher profit margins, they may take for granted that there is room for negotiation because it will just come out of the printer’s profit. This, in turn, generates the belief that the most important thing to a buyer is price.
It’s in the Details: Print buyers are generally very good about capturing the specifications for a print job (i.e., finished size, ink specifications, etc.), but rarely include the overall goals or expectations for the print projects (i.e., how the project will be used, the expected ROI on the piece, quality expectations, etc.). Buyers’ bid sheets are generally flawed because the overall expectations aren’t communicated.
As you are well aware, the more sparse the specs, the more room for interpretation. Each printer is likely to interpret the specs in entirely different ways, which will result in a larger variance between quotes.