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Thursday, September 25, 2008

Fixed or negotiated price

If you read this this thread "Price is not negotiable" you'll quickly discover that not everyone agrees with the thesis -- and some disagree with extreme emotions. In fact, this thread, while tackling an important issue, descends to the lower level associated with political forums and establishments of ill-repute.

Yet the underlying debate is fundamental: Should you declare your price, and stick to it, or build in "negotiating room" and bargain with the client. I tend to agree with one poster, Seth Holdren, that "it depends" -- different selling situations and industries have different practices; the model of selling appropriate for a complete renovation project at a high-end home may be different than the pricing for installing patio doors.

Many businesses, of course, have pricing grids -- some building supply dealers have sophisticated computer programs where they can 'code' their clients and then adapt their pricing accordingly depending on volume and credit worthiness. The price is 'fixed' in these cases, but of course isn't really fixed if you know the critical points in the process. Others, (ourselves included) have variable publicly posted prices -- if you elect to advertise every month, on contract, your price will be lower than if you advertise one time. These variations of course are appropriate because there is value to most businesses in achieving stable cash flow and predictable income streams.

But, the question arises, if you quote a price, whatever it is, should you bend your price if the client comes back and says "that is too much"? What are your opinions?

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