Sharpen my pencil? Why?

I got a call one Friday this summer from a potential customer about his embroidered logo apparel needs. He owned a local restaurant and was in desperate need of some embroidered apparel. The person who had been supplying his logo wear is no longer in business and he was out of shirts. He asked me to come in the next day (Saturday) so he could get this going quickly.

I went to his restaurant on that Saturday afternoon. At the end of the meeting he asked me to put some pricing together and get back to him, which I did on Monday. I heard nothing from him for over a week. For a guy who said he was in a hurry, he certainly didn’t act like it.

He comes back two weeks later and asks me to “sharpen my pencil”. My price was “a little higher” than what he was paying before (I wonder why the other guy is out of business!).

Now, I don’t mind getting asked this question. I understand where it comes from. I understand people are trying to save a couple of bucks in this economy. And I understand that is doesn’t hurt to ask, right?

At this point it seems I have two options. One is to lower my price. Of course I have no idea what “a little higher” means as he didn’t tell me what he was paying before. So I really don’t know how much he is expecting me to give away.

My second option is to stand firm on my pricing and risk losing the order and a potential good customer.

I wanted to ask this guy what would happen if I came into his restaurant and said to his wait staff, “I think your California burger and fry combo is a little overpriced. I am used to paying less, please go sharpen your pencil and come back with a lower price.”

We all know how that would go over.

Here’s my point. We all have different business models. I set my prices to support my business model and he sets his prices to support his business model.

He has no idea what it costs me to create that custom embroidered shirt for his restaurant. Don’t insult me with the idea that you know what the price “should be”.

Here is the lesson in this story-“A customer that comes to you for price leaves you for price.”

The Thread Logic business model is built on establishing long-term relationships with customers. Price is only one component of that relationship.

I have an obligation to my employees, customers and suppliers to keep my business viable and operating. If I compromise my pricing too often, that obligation also gets compromised.

I actually stood firm on my pricing in this case, choosing not to “sharpen my pencil”. I have not heard from him and assume he found someone whose price was closer to what he thinks it “should be”. I wish him the best of luck.

Now maybe that is not the right way to handle it. Maybe I am giving up the opportunity for a great customers. What do you think? How do you handle these situations?

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One Response to Sharpen my pencil? Why?

  1. threadlogic says:

    Rick, thanks for the show of support. Our goal is not to be the “Wal-mart of the industry”. We strive to bring quality and service at a reasonable price. Not very complicated, but it works for us and our customers.

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