Negotiating Prices with Customers
In custom finishing work, there comes a time when you have to draw a line. March 9, 2010
Question
A lady I did some refinishing work for a little while back has called me back to refinish her bathroom vanity cabinets. The original quote I gave her to do them in two colors was too high so I reduced it to do them in 1 color. She still says the price is too high - though she keeps stressing how she's like me to do them for her. I tried explaining the amount of work that goes into doing these, explained that I would likely run into contamination issues, explained that I have to remove/reinstall, ship, materials - it all costs money.
She's said that she can have two new vanities built and finished for $2300.00, which she claims she can install herself (after I mentioned that installation isn't free either). I don't believe her on this fact and was hoping some of you fine gentlemen could estimate what you'd charge for building/finishing the following;
Bathroom vanity cabinet is approximately 24" deep, 30" high with six doors, and three drawers. Melamine interior with solid wood doors and drawer fronts, veneer sides (one visible side only). For refinishing this particular vanity, I quoted $860.00, which is low enough as it is (I think), or am I out to lunch on my pricing? The total for doing this, a set of 5 doors (uppers) for another (plus visible box faces), and a third with four doors and two drawer fronts was $1875.00. Is this high or something? She's really leaning on me to lower my prices and went so far as to mention the word overcharging. Unless I'm actually overcharging here I'm not really willing to budge anymore on my prices. So who's head is in the clouds here mine or her’s?
Forum Responses
(Finishing Forum)
From contributor R:
How about a breakdown on how you arrived at your price?
From the original questioner:
Price is based on removal of hardware, hinges etc., transporting all doors/drawers to and from my shop plus reinstallation. Approximately two gallons of precat, cleaning solvents and other materials, and about 1.5-2 days on site masking and spraying, and an additional two days in the shop. Remember this is three separate vanities in three separate rooms.
I'll also add that the biggest of these cabinets is about 9' long, the second about 7' long and the last one (the upper) is 8' long (if that helps). There is a total of 15 doors and five drawers.
From contributor R:
That sounds like a reasonable price you gave to an unreasonable customer. Once in awhile a customer is persistent on me lowering a price when I have already given them a fair price. When I point out that the only way to lower the cost is for me to cut back on the quality of materials I use. Cut a lot of corners, only apply X number of coatings instead of the normal number. The reasonable customers usually get the idea and opt out for the original cost I quoted them.
From the original questioner:
I actually offered her a compromise of dropping the price by 35% and only doing the faces of the doors with two visible edges, faces of the drawers with three visible edges, cabinet sides and base with no work to interior or hidden veneers. She didn't like that option (as I assumed she wouldn't) but kept pressing me for a lower price. I wouldn't budge. I'm pretty sure that once she actually prices new vanities out she will realize that I'm not overcharging her at all. I actually think (after browsing the knowledge base) that the price she was given was most likely for unfinished cabs/doors, which would then cost her even more for the finishing than I quoted for the solid color lacquer spraying.
She's kind of like that though, even when I was doing the last job for her it was always "you remember you said you'd do this or that" when I hadn't said a thing about it. Unfortunately I made the mistake of not getting the details of the work on paper, so I had to do a bunch of extra work for free - probably why she now thinks I'm overcharging. I'm not going to lower my price - there is other work out there. She'll just have to learn the hard way.
From contributor J:
Whether she can get new cabinets for $2,300 is irrelevant. In some situations, it does make sense to replace rather than refinish a piece of furniture. It's up to her to decide whether this is one of those times. The price is the amount of money for which it makes sense for you to do the job. You noted that there is other work out there. If that work pays your accustomed rates, then it makes no sense at all for you to drop your prices for her at all. In this, as in all bargaining situations, your power lies in your ability to walk away.
From the original questioner:
I just sent my potential client this email, after reading the knowledgebase and the many posts on this forum relating to pricing. “I have both reviewed the pricing I quoted you on the refinishing of your vanities/lr cabs by reviewing and cost pricing expenses on your kitchen cabinets as a reference, and consulted with several other finishers on the details of your project to ascertain if my pricing was out-of-line. The consensus seems to be that my pricing is actually well below average and that construction/finishing/installation of two new vanities of the same size as are currently installed would be well and beyond the $2,300 you mentioned you had priced out for even the most basic form of finished and installed construction of any notable quality. Therefore, I apologize as I cannot offer you any price lower than that which I have already quoted you.”
Kindest Regards,
This is a professional response, is it not?
From the original questioner:
Thanks for your post contributor J. Indeed, there is other work, but it's not like there's a whole lot of it, unfortunately. However, I can't just work for free either. So I have to keep my pricing at reasonable levels. I could go cheap like some of the painting companies in town do, but I won't because I will not compare myself to the horrendous work they perform - and thus will not base my prices on their quality of workmanship. I have a reputation to uphold, and I'd rather be the high bidder than the low one.
From contributor J:
It's professional in tone, but you're setting yourself up for further argument. You're trying to defend your position with a bunch of vague, unproveable and/or irrelevant information about typical pricing, what other finishers say, what you think new cabinets cost, etc. Each of those irrelevant, unprovable ideas provides her with another opportunity to question your rationale and challenge your price. The only thing that matters here is that it's not worth it for you to drop your price. That idea is simple, rock solid and requires no rationalization. The fact that you're even spending your time on this discussion is communicating to her that you need the work, so she should keep pushing. When she says, 'I can get this other thing cheaper,' all you need to say is, 'well, maybe that's a better choice for you. Let me know what you decide."
From the original questioner:
Thanks for the insight contributor J, and in fact I did tell her that. When she kept pushing for the lower price, I told her that maybe it would be better for her to get the new cabs. Normally, I wouldn't waste the time of day to explain my prices to a client, but this one keeps saying that she really wants me to do this job, so I feel I have to explain myself. Maybe I don't.
From contributor J:
Part of the problem is that you've set yourself up as her adversary by explaining how you're right and she's wrong, thereby making it a discussion about who wins and who loses. Even if you get the job, you don't want your customers to feel you've put them in the loser's seat; they'll be less likely to recommend you, and less likely to call you for the next project. It's much better to frame the discussion as cooperation between partners. She really wants you to do the work? Great! You'd love to do it. Here's the price you can offer. If the price doesn't work for her then you can express genuine regret that you couldn't work with her. There's no need to become her nemesis over this.
From the original questioner:
I understand what you're saying contributor J, but indeed I have no intention of either becoming or making her my nemesis. In fact she has been a great person to know as far as business is concerned - but like I said there is no way I can lower my prices for her any more than I already have (high income city - sunshine tax) and maybe she doesn't understand that yet (she's new here). I'm only trying to explain to her in the best way I know how that I’m not trying to rob her, just maintaining a price level that is fair and equitable for the services performed (and it's a low price here as it is - any other client I’d add 30%) . She just doesn't get that - and I’m having a hard time explaining that it costs me $30 in gas just to drive to talk to her, let alone the time. It's difficult to negotiate with a client who thinks that a one hour job on site is one hour, when in fact it is a five hour job.
From contributor J:
To the original questioner: I hear you, and I don't want to beat my point into the ground. It's just that justifying prices is always a losing game. It's not a moral issue unless you're gouging a starving man on the price of oatmeal. In normal circumstances, everybody is out to do as well for themselves as they can. Pretending otherwise is a recipe for unproductive negotiations.
From the original questioner:
Justifying prices is a losing game, one that I will avoid in the future. My price is my price, take it or leave it.
From contributor C:
The reason she keeps you engaged (wants you to do the work) is that you are the lowest cost she has found, plus you will spend $30 in gas to go talk to her, and none of that costs her a penny. Be polite, and go pursue real work at real prices. If she wants to pick it up again, don't fall for it. Just remind her she has your pricing and knows how to get in touch. You may consider even raising the prices, due to unanticipated costs.
From contributor P:
I lost my first business by trying to please customers by lowering my price so they would be happy. I did not make enough money to cover overhead and enough to buy weiners and beans. Actually, I think your price may be low. Regardless, tell that this is your price and I can't lower it any more. If she is serious, she will let you do the work. If you do the work, do not do extras unless you are paid for them (get it in writing). I have seen too many good craftsmen go out of business by not making a reasonable profit. You might stay busy by doing work cheaply, but it only lasts so long.
From contributor F:
Your last sentence should be plastered on every wall in every business as I would rather do half the work for twice the money than do twice the work for half the money and I’m sure most would agree. For what it’s worth I think your price is already too low. You need to learn when to say no sometimes so that you can remain profitable.
From the original questioner:
I too lost a business due to not being profitable enough, and in fact I am still recovering from it and trying to dig myself out of the mountain of debt it left me. I suppose I should learn from my mistakes and not give "deals" to anyone. I love what I do, but could really use a good smack upside the head sometimes when it comes to being a businessman.
As for the prices already being too low, I agree. For anyone else, I would have charged an additional 30%, but me being stupid businessman decided to give her a deal because she was repeat business, even after giving her a deal the first time around. I think I have to learn to be more confident about my pricing so it doesn't get in the way of doing business.
From contributor F:
You really can’t compare your pricing to anyone else’s as everyone has different bills they have to pay each month. You need to figure out what your overhead costs you per hour, you need to figure out how much you want to pay yourself per hour, you need to figure out what your materials will cost, and lastly you need to figure out how much profit you want to make. You can get by forever with near zero profit (you will never grow though), but when your prices start creeping below what you materials, overhead, and labor cost you are heading for disaster. The biggest mistake I think people make is when calculating your overhead. They just don’t include everything, or don’t even bother to add it up. As long as you price your work by materials plus labor plus overhead plus profit equals selling price, you will do just fine - assuming there is enough work to keep you busy. But if you did your business plan well, there should be work.
From contributor A:
Well I'm working on a new business plan, this is, after all, a new business. Things are still slow, but oddly enough, not nearly as slow as they were in the summer, which is usually my busiest season. I did some number crunching in excel. I'm fortunate enough that my overhead isn't too expensive. I figured out that based on a 160 hour work-month my overhead cost per work-hour is $18.60. Minimum labor rate I’d like to achieve is $45/hr, and I factored in $11/hr for materials plus 10% profit, for a total of $82.06 minimum per hour I should be billing (CDN). I don't know, but that sounds high to me. Does it sound high to you?
From contributor F:
It sounds reasonable to me, except I wouldn't lump your materials into your hourly rate. Your overhead also shouldn't be based on a 160 hour month as you need to factor in non-productive time such as accounting, estimating, etc.
