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  • #982546
    Jamesie
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    I run a sound hire business and work very hard at marketing, maintenance and of course serving my customers for their various performances, dinners, promotions and community events.
    Last year I gave a community cause a great dealt to get my foot in the door with their organisation, but I was paid reasonably.
    All went well, we had a great show and the whole audience, organisers, staff and performers agreed it was very successful, possibly better than ever before.
    The previous year a start up company had came along and offered their services for free, and the result was worth every penny. Many disappointed performers and public music fans, some needed guarantees the other entity would not be involved before they attended the following year.
    This year there is a new committee and they have chosen the other guy once more for the audio equipment but they want to use my lighting. I assume he has come in at zero or close to be considered for the job again.
    This is typical as he is always low balling to the point of ridiculous, regularly doing shows for well funded customers for negative gain. It costs more to transport, set up and maintain equipment than he is charging let alone storage and other considerations.
    What is a good way to negate his impact on my business? Can I use his low self value to motivate my customers away from him? Many of these performances or community events have reasonable budgets and can afford professional services but the more times he does this work too cheap, the less budget they have to do the same thing properly next year.

    #1137365
    Zava Design
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    He’s winning the business on price, you need your communications/marcomms to communicate on quality/reliability …etc. Look at improving that area. If you’re focusing on a specific competitor and trying to compete directly against him you’ll lose the focus of what YOU need to do.

    If you’re not able to improve your macomms messages enough to negate the price issue I’d consider bringing in a marketing professional.

    #1137366
    Greg_M
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    Sounds like a typical committee.

    Your options as I see it would be to …

    1. Refuse to break up the your package (sound and light), saying that the combined items are the basis of your competitive pricing … can they get a cheap, adequate, lighting package as a separate item?

    2. Do it for nothing as a promo (probably what the competition is doing), and do such a good job you possibly wipe them out for future consideration.

    3. Take the lighting portion at a profit and watch the competition take the hit, and possibly screw it up again.

    This kind of “Dutch auction” on subcontracts is common in construction contracts, probably worse in your case, given it’s a committee.

    It’s made worse if work options are in short supply … there’s always an idiot chasing turnover to stay afloat. You can follow the price spiral down and test whose got the deepest pockets, and who goes broke first.

    Or you can stand aside, get less work, but be selected on criteria other than price.

    The companies working too cheaply, do eventually go to the wall. The question is … is there enough other work to survive while you wait for it to happen?

    Some of my clients in a similar situation (different sector of course-similar issue) are now just walking away (demand is dead), rather than follow the price spiral down.

    #1137367
    Jamesie
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    I have already refused to break up the quote and have told them the sound and lighting is a package.
    There is no way known I will be sending my lighting rig with many tens of thousands of dollars worth of rigging, supports and of course lights for this guy to pretend is his. He will have his big banner there claiming to be the world’s best sound business and I want no part in making him look good.
    I am trying to have a meeting with the head honcho from the committee this year, I have only had email communication with him and as yet have not been able to call or face to face.
    This is a one day music festival and there are more stages and opportunities for renting other equipment so not all is lost. I might be able to turn a bigger profit spreading equipment across several stages, but I could also do the whole thing.
    Maybe I could get some satisfaction from the fact I am being paid properly and he is doing it for bread and water. Still, there are several thousand dollars not being paid to the people who do this for a living and that is my biggest gripe.

    #1137368
    bridiej
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    Happens all the time in my area of work too. Years ago I used to let it get to me. Now I do as Zava and Estim8 suggest and market myself on quality, rather than price. Yes, there are always those who only look at the price, but equally there are many people who appreciate what I have to offer and are prepared to pay a little more for a great end result.

    Personally, I would step away from the whole thing. In a few years they’ll probably be in touch because this other guy has gone broke! ;)

    #1137369
    Thrive Promotional
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    Only one competitor … Lucky you!

    It is disappointing when you provide a great service, you’re prepared to work hard and go beyond the call .. But then it comes down to $$. It is simply a fact of business…and remember your client needs to be guided about the difference of your proposal.

    This is a quote I tweeted only this week … “The bitterness of poor quality is remembered long after the sweetness of a low price has faded from memory”

    Assess what you do well and, as the others have said .. Sell those to prospects. perhaps an easy way to do this would be to prepare a check list i.e. what you will receive from us is .. a supplier who has the latest equipment etc etc. Include with proposals & include testimonials from past successful events.

    Good luck and keep doing what you do well and professionally.

    Cheers

    #1137370
    bridiej
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    Thrive Promotional, post: 156722 wrote:
    This is a quote I tweeted only this week … “The bitterness of poor quality is remembered long after the sweetness of a low price has faded from memory”

    Love it! So succinct, and so true…

    #1137371
    MH08
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    I was working with another client who was suffering huge loss due to a ‘financially smarter’ competitor similar to your situation now.

    The best way is to use strategy over the long-term I can’t stress enough its about the value customers/clients get from their dollar, not how good your business is at doing something, because they have to pay before they see how good it is.

    Sometimes charging even more than then low rate guy could get your more business, the reason? If you market right and at a higher price people will assume your worth the value, if your price is near the competitor theres choice now.

    Going back to the point ‘financially smarter’, what I mean by this is that the competitor may know how to calculate costs better or negotiating transport (if everything is outsourced), I know that I could rip through my competition by charging far less and selling at near volume level.

    To charge less you have to have more, sounds weird but look at like this. If you have 10 products at a wholesale cost at $10, plus marketing expenses at $50 now that makes the product cost $15, you retail for $30 turns out to $15 profit.

    Now if your marketing costs per product $50 was divided by 500 products, thats a $1 dollar per product for marketing, you could charge $30 and take more profit per product.

    Don’t think for a second that if you sell/hire half your product you can pay off your marketing expenses, this is why small businesses shut shop so quickly, the costs have to be divided by all your product because product pays for everything.

    If you suffer a $10 loss a day thats $3,650 a year, in 5 years its $18,250 a loss that you will feel pain for. probably a years rent on a warehouse?

    This simple formula is why small businesses always stay small, the numbers never lie know matter how good or bad something is.

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