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Thread: What makes people so cheap?

  1. #1
    Join Date
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    What makes people so cheap?

    I ran into a situation the other day that just about offended me when it was said. The more I have thought about it, the more puzzled I have become.

    I run a business. I charge what I think is a fair rate. We have $50,000 worth of machinery to produce the products we do. I'd like to think that $60-70 per hour is fair for our business. When I go into other places that do the same thing we do, I always see signs on the wall that say things like "Our shop rate is $90 per hour".

    So all in all, I guess we are at the low end for our business.

    So I'm in a meeting about 8 months ago, and someone asks this computer tech guy "What's your rate". He says without blinking an eye, "$130 per hour". At the time I thought "Wow, that's pricey, I can't afford him", and the person that asked said "Well, that's about right for IT work".

    So, I thought I was just out of the loop.

    Fast forward to last week, I'm in a meeting with the owner of that company, and others. He whips out some marketing material he had printed. It was a lot of stuff, lots of pages, etc. He then says "Yeah, and I saved a boatload of money on this. I got it online and I saved 75% over what my local printer wanted for it".

    That really offended me. Why, you ask? Yeah, I thought you would.

    I can't get past that level of arrogance. The printer has $50,000 digital printers, inks that costs $1500 a pop, etc. So they have to make a living. Do you think if they charged you $130 per hour, that would be okay? Apparently not. Apparently it's only okay to make $130 per hour if you are him. If you supply services to him, then he would like you to make $17.50 per hour. That's the printer's $70 per hour rate, cut by 75%.

    Am I wrong, or is that extremely arrogant? Would you be offended if someone told you that they saved 75% over your cost by going to the internet, and then handed you a bill for $130 per hour?

    Just curious and opening up a discussion while a job is running (bored).
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    Real name Steve but that name was taken on the forum. Used Middle name. Call me Steve or Scott, doesn't matter.

  2. #2
    I would not be offended.

    Customers are by nature drawn to the least-expensive solution to their particular problem.

    For instance, I have exactly ONE decent tool shop in my area. One. I would love to do more business with them so that they continue to be the ONE decent tool shop in my area.

    But when the difference between them and the internet is more than $100 or more than 30%, I generally turn to the internet. If they go out of business, I'll be without a "right-now" solution when I need a router bit, etc. But I don't see why I should pay a lot more for the exact same product or service. I'm just a consumer, after all.
    Deflation: When I was a kid, an E-ticket meant I was about to go on the ride of my life. Today, an E-ticket means a miserable ride.

  3. #3
    Our economic system encourages people to seek the best value, which translates to increased productivity. So if one company can produce a widget for $10 and another charges $20 for the same widget, the company charging $10 will prosper and the company charging $20 will not. The $10 company is more productive.

    Productivity generally means a better standard of living. If the $10 company can produce the same with less workers, those workers will usually make more than the employees at the company charging more, perhaps because they're doing more specialized tasks requiring more training.

    Productivity gains come from competition in the market, and increased productivity means a higher standard of living.

    So I would not be offended by the person who was able to buy something for less money. That's what our economic system encourages them to do.

    Mike

    [To answer the question in your title, "What makes people so cheap?" - Our economic system makes people so cheap and it works pretty good. Our economic system is not about "fairness" but about productivity and lower prices.]
    Last edited by Mike Henderson; 07-16-2009 at 8:56 PM.
    Go into the world and do well. But more importantly, go into the world and do good.

  4. #4
    We all want Nordstrom service and Wal-Mart prices; we are doing ourselves in. For an equal product or quality of service it only makes sense to get the best value. What I find disturbing is folks who get upset when their $10 internet printing job doesn't equal a $50 local job ;-)
    “If liberty means anything at all, it means the right to tell people what they do not want to hear.” -- George Orwell


  5. #5
    Join Date
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    Here is my own story,

    I had a customer come in the store and the first thing he asked is why he should buy here (only independent left standing in a city of 300K) instead of the BORG. I told him because our prices are the same or less, we service what we sell and we know what we are talking about.

    He came in to buy an impact and a circular saw. I spent over an hour with this guy showing him the various brands we sell and allowing him to test various impacts and drills. He had asked about a Makita accessory kit ($50) and I told him it was free with any Makita purchase over $500. He ended up buying an LXT401 minus the 'cip saw and the flashlight (hammer drill and circular saw in kit bag). The price was really cheap. I had credited back the two tools he didn't want at full pop.

    I was out at a school yesterday looking at guarding issues. When I got back, I noticed there was a returned Makita kit. Turns out he returned it saying he found it at a lower price at the BORG. I asked today if the free accessory kit came back, and it turns out it didn't. I don't blame the staff member, I had commented to everyone that it was the hardest sale I had had in a long time and the staff member figured out this guy was him and was in a hurry to attend buying customers.

    There is no chance he found it at a lower price. He found something of a similar description and assumed it was the same.

    How would you deal with customers like this?

    David, Tool store Manager.

  6. #6
    Quote Originally Posted by David Eisan View Post
    How would you deal with customers like this?

    David, Tool store Manager.

    Well, hopefully this guys face is burned into your brain. Next time he shows up ask him for the bag back. If he refuses, lead him to the door and don't do business with him. He basically stole from you. Plain and simple.

    I am not going to go head over heals to try to sell someone my service. If they can't easily be convinced by simple facts and hard knowledge, then let them shop somewhere else.
    LRG WoodCrafting (Google it )

  7. #7
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    Quote Originally Posted by David Eisan View Post
    Here is my own story,

    I had a customer come in the store and the first thing he asked is why he should buy here (only independent left standing in a city of 300K) instead of the BORG. I told him because our prices are the same or less, we service what we sell and we know what we are talking about.

    He came in to buy an impact and a circular saw. I spent over an hour with this guy showing him the various brands we sell and allowing him to test various impacts and drills. He had asked about a Makita accessory kit ($50) and I told him it was free with any Makita purchase over $500. He ended up buying an LXT401 minus the 'cip saw and the flashlight (hammer drill and circular saw in kit bag). The price was really cheap. I had credited back the two tools he didn't want at full pop.

    I was out at a school yesterday looking at guarding issues. When I got back, I noticed there was a returned Makita kit. Turns out he returned it saying he found it at a lower price at the BORG. I asked today if the free accessory kit came back, and it turns out it didn't. I don't blame the staff member, I had commented to everyone that it was the hardest sale I had had in a long time and the staff member figured out this guy was him and was in a hurry to attend buying customers.

    There is no chance he found it at a lower price. He found something of a similar description and assumed it was the same.

    How would you deal with customers like this?

    David, Tool store Manager.
    This is not an unusual story (except for the theft). Lots of people go to the places with friendly, knowledgeable staff to get all their questions answered and then go to the cheaper store or the internet to buy the goods. They don't connect yor knowledge and time to the price. Unfair, yes. But true.

  8. #8
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    I do understand what you are saying, but in this country this happens all the time. I taught school for 37 years. During those years many people from parents and to major politicians, including presidents, proclaimed that teachers should earn more money. Did we end up getting good raises that they said we should? Absolutely not. My question to you is why? I had more education and more "client contact hours" (amount of time directly serving a client-averaged 30 clients at the same time every school day), more stress, according to some studies, than most people who made substantially more. It's just how our system works. I spent those years enjoying my job and doing my best to give my students the best education I could despite the archaic school system and I wouldn't have traded my job for many that would have paid more. BTW -- I've been able to save thousands in decorating and outfitting our new home through the Internet. Should I feel guilty about that?
    Don Bullock
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  9. I think there is a moral issue when you take up a salesperson's time, leverage his experience, and then buy from someone else for a cheaper price. Its something I avoid doing consciously, although I have had situations where I have looked at an item in a store, without taking up someone's time, and then later found it on sale either on-line or elsewhere and bought it.

    But I don't feel its fair ... or moral ... to use someone's time and experience, both valuable assets, if you plan to "shop for price" on the 'net afterwards.
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  10. #10
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    Quote Originally Posted by David Eisan View Post
    Here is my own story,

    How would you deal with customers like this?

    David, Tool store Manager.
    That's just downright dirty of that customer. As a business you may not have much further recourse once the return transaction has been completed. Obviously the guy must've waited until you weren't around to do the return, knowing you would ask for the kit. I guess he figured the "free kit" was his free gift just for trying the Makita and he wasn't being offered it at the Borg.

    It's amazing how many scruples and morals get thrown out the window when someone has a chance to save a literal dollar and they don't care what the impact is to someone else. I just try to follow the command "Do unto others....."
    Mark's Wood Shop
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  11. #11
    Join Date
    Dec 2006
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    Toronto Ontario
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    As others have said, we want Wal-Mart pricing and the utmost in customer service.

    I find it insulting, to say the least, when someone expects that their time is worth X, while only being willing to pay X/2 for other peoples time, for similar skill and investment values.

    This chase to the bottom of pricing only removes diversity and choice from our lives. If we give all of our business to the largest businesses, the smaller, more flexible businesses will fail.

    The large companies have economies of scale that smaller companies cannot compete with, however smaller companies can do the one off items, the special orders etc because they have that flexibility.

    If we continue to only shop based upon price, one day we're going to find that ULTRABORG is the only supplier in our town, and if they don't carry it, you won't get it.

    Customer service in my opinion is the key to sales.

    A year ago I was looking at the Felder, Hammer and Mini-Max jointer/planer combo's.

    I spoke to the Minimax dealer in Toronto, and in London, as well as Felder.

    At the woodworking show, the London dealer had the booth across from Felder, and I went to them first to talk about prices on the Mini-Max. The astounding response was that I would have to drive to London to go to the dealer location and talk pricing.

    I walked across the aisle to Felder, and they were more than happy to get my wife and I a coffee, and discuss pricing, and take a deposit on the machine.

    Since I hadn't started out with any pre-conceived notions as to which machine to purchase, the company with better customer service had my business.

    So, keep buying on price only, who needs alternatives?

    Regards, Rod.

  12. #12
    Join Date
    Dec 2006
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    The problem with some small businesses is hiring help that understands the concept of 'customer service'. I try shopping locally at the mom and pop stores. But when I walk in and ask a question, I would like some help. I don't want to see sales people hiding out avoiding me. And employees should NOT be allowed cell phones while working (and PLEASE get rid of the chewing gum!!!!). I'm willing to pay a bit more for good customer service. But give me bad service and I'll buy the product online instead of dealing with hostile clerks. I don't expect to walk into a local store and have the clerk tell me 'Oh, you'll find that item 15 aisles away' as they point in a general direction. SHOW me what I'm looking for! If I want that kind of help I can go to Walmart (which I refuse to shop at). Hire people that know the stock too. Example... went looking for a drill guide. Even in the contractor section they'd 'never heard of such'. Finally we ended up traveling 60 miles to another city to buy one because the powers that be in the local store never heard of a drill guide?!

    Bad customers, I know they're out there. Just don't label ME as bad as soon as I walk in the door. I know of plenty of people that have returned things after buying them, because they only needed it for the one time usage. That's something I'll never do.

  13. ut when I walk in and ask a question, I would like some help. I don't want to see sales people hiding out avoiding me.
    Here is the customer service I want in a place like that: I want a salesman available (and able) to answer questions, but I don't want him following me around to every item I look at trying to tell me why I should buy it. Nothing I hate more than a shark looking for a quick commission. Unfortunately it seems you get the two extremes: sales people that are ignorant and invisible, or the 1950's used car salesman. grrr...

  14. #14
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    I do my research, decide the brand or product I need will do the job, find a store or website that carries it and then, buy it.
    Sadly, I don't have access to anything but BORG type stores. Their clerks are USUALLY ignorant. Some aren't. And, the tool selection is limited to a few manufacturers. And, that selection is limited to what sells best. I understand and accept it. I just won't go there for my tools. So, I'm destined to either travel 180 miles or buy on the net.
    Gene
    Life is too short for cheap tools
    GH

  15. #15
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    I have no issues with shopping around for price. I do have a problem with someone devaluing my service and expecting their service to maintain $130 per hour levels.
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    HP Designjet L26500 61" Wide Format Latex Printer
    ShopBot 48" x 96" CNC Router, Ricoh Dye Sublimation Printer
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    Real name Steve but that name was taken on the forum. Used Middle name. Call me Steve or Scott, doesn't matter.

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