"We need a procedure," Pete said, "something to follow so we are consistent."
"We don't need a procedure," Nick countered. "We need a number."
Nick was one of our best sales people. He was, in many ways, the antithesis of Pete. Nick preferred to fly by the seat of his pants after throwing out any and all instruction manuals that he might come across while putting together the airplane.
The task at hand was setting the price for a new lead, a midsize home builder with a 10-house tract. It was Nick's lead, but Pete was helping with the take-off and proposal for the model home. They had all the material lists together, as well as our costs. They brought this information to me for the final selling price.
Pete's passion for procedure has been very helpful and productive throughout the years. It has led to concise job descriptions and operation manuals that have served us well. Most famously, it led to the sales process we follow for our kitchen designers. So his comments here deserved respect. Over Nick's protests, I decided we would use this proposal as a template for a new "pricing procedure."
Pete took the notes.
"Step 1: Begin with regular retail pricing for the products involved with the project," he said as he wrote.
"We can't charge him retail," Nick said. "He's a builder."
"Step 2: Adjust to builder pricing if prospective client is a builder," Pete continued.
"And this is big project," Nick pleaded, eyes on me, looking for permission to lower margins even further. "Ten houses ?"
"Step 2, builder pricing ..." Pete said, tapping his notebook, a stern look in his eyes.
"The job is right around the corner," I said. "It would be an easy job to service."
"Step 3: Adjust margins downward if geographic location permits ?" Pete grudgingly wrote.
"But how is this guy's credit?" I asked. When Nick winced, I knew the answer: not good. He reluctantly showed me the credit report our bookkeeper had run. We made some pricing adjustments.
"Step 4: Adjust margins upward if client displays poor credit history."
"All this guy is going to look at is the trim," Nick said. "That's the whole reason he is letting us bid on the job. He's convinced his last supplier ripped him off on the trim."
"Step 5: Adjust price on sensitive product downward if ..."
"But you'll have to raise the cabinets price to make up for it," I said.
"Step 6: Adjust nonsensitive product ..."
"He thinks of the cabinets as part of the trim," Nick said.
"... unless products from step 6 are the same as products from step 5 in the mind of the client ..."
"How about the framing?" I asked.
"Framing is very tough right now," Nick said.
"Step 7: Framing is very tough ..."
"We've got to get the margin back somewhere," I said.
"Step 8: Always get the margin back ..."
"We can get a few extra points on the windows," Nick offered.
"Step 9: Windows ...points ..."
"And charge retail on store items," I said. "That credit report doesn't deserve our lowest price on everything."
"Is that step 9 or 10?" Pete asked while Nick gathered up his papers and called the client on his cell.
I suggested step 11 to Pete: When pricing a job for a new client, the procedure would be to take equal parts available information and gut feelings, mix them together with a dash of best expectations, and deliver to the client neatly typed in a timely fashion.
Pete agreed, and threw his list in the trash.
Tad Troilo is a manager for Cranmer's Kitchens by Design in Yardley, Pa. 215.493.8600 E-mail: [email protected]
