Signmaking is territorial, and that can hurt

[depps74]

I worked my butt off for my largest customer for 3 years. A museum. 4 months ago the department I work directly for said "your great we want you to do everything for us now". Then a new director came in and brought with them another sign company. Now I have to bid on every job and this other company prices jobs out at 1/2 the price I do. I've done about 3-4 jobs at 1/2 price, but some jobs they just give to the other company without letting me bid on it at all. It's super nerve racking and I'm not sure how to handle this. If I ask I look desperate, but sitting with another rooster in the henhouse is very uncomfortable.

BTW: This company is about 40% of my billings. I know I need more customers and I'm working on that but right now this is the situation.

My question is: Should I just settle for underbidding and suck it up or should I charge my normal rate and loose jobs and potentially the entire account? This client is ultra demanding, very picky, and usually gives short notice. But.... the money is whats keeping me alive right now.

 

[Texas_Signmaker]

I worked my butt off for my largest customer for 3 years. A museum. 4 months ago the department I work directly for said "your great we want you to do everything for us now". Then a new director came in and brought with them another sign company. Now I have to bid on every job and this other company prices jobs out at 1/2 the price I do. I've done about 3-4 jobs at 1/2 price, but some jobs they just give to the other company without letting me bid on it at all. It's super nerve racking and I'm not sure how to handle this. If I ask I look desperate, but sitting with another rooster in the henhouse is very uncomfortable.

BTW: This company is about 40% of my billings. I know I need more customers and I'm working on that but right now this is the situation.

My question is: Should I just settle for underbidding and suck it up or should I charge my normal rate and loose jobs and potentially the entire account? This client is ultra demanding, very picky, and usually gives short notice. But.... the money is whats keeping me alive right now.

Well, at 40% it sounds like your stuck because your not diversified enough. This should be a lesson to all of us to not let one client get too big. My biggest client is 10%. It sounds like this company is the main reason you have food on the table so I think you gotta do what you gotta do to keep it coming and stay afloat. I'd try to work my butt off and make sure every order is perfect, you are friendly and fast and give them a compelling reason to give you the work over the other company. Maybe the other sign company will get complaisant and tired of the demanding nature of this client and they will see you as the one to go to.

In the meantime, work on getting some other clients. Get out there and knock doors, shake hands, do the salesman thing and drum up some business. Work on your Google listing, work on your website and get some new blood coming in. Never underestimate knocking doors. I

It's going to be easy for people to say ditch this client, but they are the ones who are stuffed and have a full dinner plate in front of them.

 

[DrCAS]

By lowering your price, you are, IMO, sending a message that you were overpriced or overcharging whether it is true or not. I have been in this situation before and I refused to play the price game. Let the other guy deal with the ultra demanding, super picky, and short notice.

Remember this... once you lower your pricing you better have a darn good reason for raising them later... That is a losing game.

 

[equippaint]

Only you can answer this question. If they spend enough to keep your business afloat then it sounds like they are paying you a premium to be that ultra demanding and picky customer or you have not properly managed expectations.
Nobody here will like this including myself but ill say it anyways: a legitimate business coming in at a lower price is not whoring, underbidding, devaluing or whatever you want to call it. Maybe they are more streamlined, they have invested in more tools to improve efficiency, their business model is volume or whatever it is. Don't be scared or mad, figure out how to do it on their level and fight for the business.
You fault the new person but the flip side to it is that she felt you were overcharging, she found another competitive bid and confirmed her suspicions. They do not need to understand your cost structure, perception is reality. Now the trust has been eroded and they are going to check you on every single job. This is fine but sit down and tell them your rationale before, its an opportunity to strengthen your relations and also a learning experience to not put your eggs in 1 basket.

 

[visual800]

you can sit at home and make no money with less effort. NEVER count on one customer, it will never last.

Get out there and build some more clientle and let this one go. Possibly one day they will come back to you, if not I hope you enjoyed the ride while it lasted. We have all had our feelings hurt and we learn from that. Count on nothing but always be looking for more

 

[ddarlak]

Make them an offer to become their official signage provider, being a museum they live on donations. You are stuck, better to give up a known amount to keep the client than giving up half of every job and missing out on others.

 

[JTBoh]

Usually if people are half your price, their level of service, materials, and craftsmanship are eventually going to suffer. Let them shoot themselves in the foot and wait for the customer to come crawling back to you.

AND/OR

You are overpriced. Museum probably buys banners, retractables, cut vinyl for glass displays... if you are doing 40% of your take on those items, then I'd suggest selling more expensive items elsewhere to fill the gap.

 

[vincesigns]

I suggest that you identify your competitor and learn as much as you can about them. See if they have any legitimate competitive advantages and see if you can overcome that thru investment in equipment or process
hang in there with your client and keep providing the great service that you always have. Stay in touch with your contacts there and be the happy, optimistic great vendor you always have been
The other company will stumble and they will call you and give you the opportunity to shine
Use the time you are not spending with this customer to find new customers that are a good fit for your business. Use the fact that you are a long time valued vendor to the museum to help position your company as a high quality, can-do vendor with a proven track record
Only cut your price if you can lower your cost. Otherwise defend yourself - while smiling and not being defensive

 

[Billct2]

That sucks and it is a concern I live with because I also have one giant client. If you can make money at the lower prices that's what I would do. But if you're losing money or making less than if you took an outside job it's not worth it. You have to make the call. As someone said, they may feel you were ripping them off, so how are you going back to go back to your old prices? Maybe the other company has methods that are cheaper, like they can flatbed print direct to substrates. It's hard to compete with someone who is making things cheaper and more efficiently. Then again maybe they are going to end up losing the client and it won't matter because they already pushed you out. So start hustling some new work. Good luck

 

[myront]

We've lost many clients for the same reason but 9 times out of 10 they come back to us. There's a reason they're under bidding and the client will soon find out.

 

[Johnny Best]

You don't have many choices in your situation, Everyone is giving good advice. You may have to just find new customers or keep on competing with the other sign company until the new director leaves.
Is the company the director brought in a local company? He probably told his company that as soon as they run you out by bidding low they can raise their prices to what they should be. Competition is healthy and you need to get other clients in the meantime. Good luck.

 

[d fleming]

Several years back I lost a bread and butter client that I had for many years to a much larger union shop that took all their work nationwide. It almost did me in but I learned a great deal from it. Sometimes you can be doing all the right things and it still doesn't matter. I had to quit doing even their overflow emergency work and installs simply because they weren't giving me enough volume to justify the price point they demanded. Oh well, live and learn.

 

[7oaks]

Have you joined the local Chamber of Commerce? You can reach a lot of people in a very short time and they are usually businesses that
need signage. I live in a small community and they support chamber members.

Ken

 

[FireSprint.com]

You shouldn't cut your price for the exact same product as before. Offer something similar for a discounted price, but leave the original product at the same price. Even if your cost doesn't change much. Otherwise you admit you could have cut 40% out of your pricing if your back was up against a wall. This is just business and it's tough.

Also as many have said, hold to your standards, especially on the old products. Improve your standards if you can. If they give you back a job at the old price jump through hoops and work all night for it. Until then offer alternatives at a lower cost and look for other business.

Dropping pricing by 40% is a race to the bottom and will eventually put you out of business. It's the opportunity cost of it.

Better to be hungry and on the hunt than to be malnourished nibbling on rotting berries.

 

[TimToad]

You've received some really great, insightful advice. The need to diversify your client base is more than obvious.

I managed the graphics department of a tradeshow/exhibit house for many years and our company had two major clients who made up about 65% of our workload. One is the world's largest athletic footwear and apparel company and the other is a high tech hardware company. The shoe company on average took between 120-180 days to pay and the other was anywhere from 90-120 days. That is a long time to wait to get paid for often five and six figure projects. Especially when they refuse to pay deposits. The footwear company has graphics houses tripping over each other to get in line to do their work and that dynamic has saved them millions or billions over the decades. They both were incredibly demanding and high maintenance and there was no way to factor those labor draining traits into the pricing of the work knowing that a dozen other vendors were on our heels waiting for the slightest crack to get their foot in the door.

Every new department head hire at both companies meant we needed to be tested on price and service again as most have relationships with vendors from earlier positions and want to make a great impression with their new employer by saving them money however they can. They could care less about long time loyalties or relationships others cultivated or earned. After a few decades of that, our owner fired both of them but not before beating the bushes, expanding the client base and modernizing procedures and equipment. In the end, we did just as well as before and the stress level for everyone dropped considerably. A large POS/POP project going into thousands of stores would regularly throw us into 60 hour weeks for months on end.

I have a few questions though and hopefully some food for thought.

How are you finding out that the other company is underbidding you by such a precise amount on every project?

What are the bidding procedures for the projects and are they sealed or not?

Have you put on your Sunday best, cleaned up your portfolio and proactively made an appointment with the new director and any other contacts you've built relationships with in order to make a presentation about why your track record, quality, and service are worthy of further consideration?

Is there a set of bidding process guidelines and procedures that are supposed to be used and adhered to in order to protect the sanctity of the process?

Is there a Board of Directors or other organizational body that you might be able to meet with to see if they are aware of the bidding procedures in place to determine whether or not they are being abided by?

Perhaps this new director is not following procedure and or is engaging in what a non-profit might consider unethical behavior by either sharing your pricing with the other vendor or worse. Maybe worse is happening in terms of kickbacks or other incentives being offered to make the switch.

In most professionally run organizations, competing bids are never discussed or revealed to the vendors. If you know who is leaking the other bids to you, try and find out why. If its out of loyalty, then figure out how to use that person as an allie to make your case on why you are the better choice. Sharpen up your pencils and figure out if its even worth pursuing. If its just to pressure you to join the race to the bottom, then increase your sales efforts elsewhere.

With the commodification of many processes and types of graphics we most frequently produce, ANY client can price shop and find lower prices. But can they find better service, quality or support their local economy while do so? Probably not.

Hope you find an equitable solution to your dilemma.

 

[equippaint]

The majority of the responses seem to assume the op's price was competitive and the new person is undercutting. In these threads the conclusion is almost always that the customer is bad, the other sign co is a dirty hack and you are right so stand your ground and dump them. Why is this? Could there ever be another side? Do sign companies never charge over market value?
Suggesting people only raise or hold their prices is not sound advice.
Am I the only one here that has had a "greedy" vendor and dropped them or called them out and renegotiated prices?

 

[TimToad]

The majority of the responses seem to assume the op's price was competitive and the new person is undercutting. In these threads the conclusion is almost always that the customer is bad, the other sign co is a dirty hack and you are right so stand your ground and dump them. Why is this? Could there ever be another side? Do sign companies never charge over market value?
Suggesting people only raise or hold their prices is not sound advice.
Am I the only one here that has had a "greedy" vendor and dropped them or called them out and renegotiated prices?

I tried not to make any of those conclusions or assumptions and simply shared a similar real life experience as well as asked some probing questions to see where the problem lies. If it appeared that I had made assumptions to you, it was not my intent. More like playing devil's advocate in order to get to the bottom of what is really happening with the poster.

I agree with you that a variety of factors can drive a client to seek out other options and think vendor complacency and pricing not based on having other competitive pressures applied is a big one. For all we know, the OP had little or no competition and because such a huge percentage of the revenue stream was coming from one source, got fat and sassy over it without ever being tested on the value being offered.

 

[Texas_Signmaker]

The majority of the responses seem to assume the op's price was competitive and the new person is undercutting. In these threads the conclusion is almost always that the customer is bad, the other sign co is a dirty hack and you are right so stand your ground and dump them. Why is this? Could there ever be another side? Do sign companies never charge over market value?
Suggesting people only raise or hold their prices is not sound advice.
Am I the only one here that has had a "greedy" vendor and dropped them or called them out and renegotiated prices?

Your not the only one... That attitude, it seems most on this board and probably most sign companies in real life have, mean opportunity for others.

I know the cavilear attitude a lot of my local competition shows to potential clients comes off as obvious. They really appreciate it when they find someone (like me) that treats them with respect and act like I really need their business.

 

[Billct2]

The majority of the responses seem to assume the op's price was competitive and the new person is undercutting

No they don't