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Product pricing in B2B

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biophase

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Jul 25, 2007
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I have a question about quoting prices.

If you have a business and new customers come to you for quotes on products how do you balance the line of: Lower pricing to win the bid and gain a new customer vs. Regular pricing which is more in line with normal margins and current customers?

Would you're strategy be to give up profit margin to obtain a new customer? At what point would your profit be too low to make it worth it? Would you ever sacrifice profit entirely ($0 profits on a sale) if it meant to secure a long term customer?

Assume that once a customer is secured you will get repeat long term business from the customer. Which brings another question... Once you start off with a low price point, it's difficult to raise prices on that customer. So it's a catch-22, is it better to have that customer at super low margins vs. no customer at all.

Is quoting prices a science or do you guys have a set formula?
 

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tbsells

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Jul 27, 2007
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I have a question about quoting prices.

If you have a business and new customers come to you for quotes on products how do you balance the line of: Lower pricing to win the bid and gain a new customer vs. Regular pricing which is more in line with normal margins and current customers?
I sell the service of selling real estate. Its different than selling a product but here is my opinion: I don't cut fees. If I cut fees to gain new business its very hard to ever raise those fees. I also show the client/custimer that I am skilled and confident in negotiations by being willing to tell him "no" if he asks for a discount. My industry is absolutely full of commission cutters and I don't think I've ever lost a potential listing over commission rate.

As far as selling a product B2B, its probably not so simple. I guess it would depend upon the quality of your product relative to your competition and your ability to service the account. Is your item somewhat unique? Does it have a competitive advantage over the lower cost item? Can your buyer resell it better than the competing item and at a higher price? Will it be more profitable for him? If so, its your job to show him how he can actually make more money by paying a little more for your product. Also, when his business take off and he needs more product you will be in business to provide what he needs. The guy selling the cheap product may not make it. If your product would indeed provide additional benefits to the buyer you should be able to command a higher price, as long as its a win-win. If your product is the same as the others you better sell it cheaper, or better yet find a new product. If you can position you and your product as being high quality and worth the money you will almost always be better off than the cheapest guy on the block. Someone is always willing to work for less....let them.
 

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