Relationship and Price

"I lowered the price to get them in the door. I knew that once they saw the value of our service and we could build a relationship, they would be a good repeat customer."

That's an actual quote from a salesperson I worked with. He was forever selling low-margin deals (a.k.a. unprofitable deals) with the big plan of making it up on volume. His big deals cost his employer millions in un-recouped development expenses, yet with these million dollar deals on his resume, he picks up a new top-tier sales job every three to four years. The relationships he establishes don’t follow him because his modus operandi kills the relationship when the drowning vendor parts ways with the underserved client.

The relationship between profits and relationships: The unprofitable relationship is unsustainable. It withers and dies. If one side is not getting what it needs to continue in business, it will come to resent the relationship and find ways to subvert it. Even if the vendor consciously feels he is trying to help another, if the cost of helping begins to threaten the things he values, he will find a way to end the relationship.

Entering into a deal at an unprofitable price point to win the business and establish a relationship is a losing strategy. The very nature of an unprofitable deal undercuts the relationship.

Always charge a fair price that gives adequate return on your investment. How would you feel about taking a job at a wage lower than you asked for and lower than you think you’re worth? Would you feel a sense of loyalty to your employer? Would you be happy to work extra hours – nights and weekends? Similarly, when your company takes a job for a client at a cut rate, there is a tendency to treat the job with less enthusiasm than full-priced jobs.

A sense of equitable pricing needs to be maintained throughout the sales process. The relationship depends on it.