Pricing Policies and the Integrity of Your Business

When you think of the pricing policies you've set for your company, would you say they are fair and consistent? Today, bartering or haggling on prices is common practice so it's often quite typical for a prospect to ask if you are able to do better on your pricing once you've given a quote. Many times the business owner is tempted to give in to lowering their quoted price to get the project. But, is this really a good policy for your business and your prospects/clients?

Let's look at an example. Say you purchased a new furnace for your home, and after much negotiating and haggling, you were told you received the company's rock bottom price. A few days later a neighbor purchased the same exact furnace and had the same installation requirements, yet their final price was lower. Would you feel as though you had been taken? How would you view the person who sold you the furnace?

Many business owners build in a little wriggle room when they quote their prices because they know people will try to negotiate a lower price. To me, that doesn't really seem to be an honest way to approach pricing. How would I know the price I negotiated was really your final price? And if I could get you to lower the price, why didn't you just give me your best price when first quoted?

Don't get me wrong, there are times when discounting of pricing is appropriate. Volume discounts are quite common and an acceptable practice provided every customer who buys in volume is allowed to receive the same discount. Cash discounts (eg. payments received within a certain time period) and class discounts (eg. senior citizen discounts) are also acceptable provided you have established your pricing policies and the discounts are extended to anyone who qualifies.

In our company, pricing is standard and we remain firm on the price quoted. If a prospect would like to cut back on the pricing, we take a look at the scope of work and discuss how we may modify it to fit into their budget. We don't undercut pricing to get a job and then quote change order after change order. Our estimate details the scope of work, and unless our clients completely change their requirements, we don't exceed the agreed upon price. In doing so, we are being a good steward of our talents while letting the prospect know our pricing is honest from the start.

Setting pricing policies is a good business practice. Standard and fair pricing policies do show your ethics as a business owner. Remember, "A good name is to be more desired than great riches, favor is better than silver and gold." (Proverbs 22:1)