Question for the entrepreneurs [NA]

Discussion in 'Hangar Talk' started by saracelica, Aug 29, 2019.

  1. saracelica

    saracelica Pattern Altitude

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    Let's say you are the decision maker in a business. You decide what company gets your business.

    Is price of item the biggest factor for you?

    Let's say company a will do the product for $20 but the customer service sucks
    Company b is a better company nicer company and people but they charge $25 per unit

    Let's be real you will need to talk to the company at some point or to someone in the company.
     
  2. Cap'n Jack

    Cap'n Jack Final Approach

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    In real life, it may not be so binary. If the company with poor customer service makes something that really requires no customer service, or has high quality, I may well go with the $20/item vendor.

    The last line might be key in your post-If you can't talk to someone but they won't respond, that doesn't indicate they will be a good vendor. Can you still sell your product and make a reasonable profit if the cost per unit is $5 higher?
     
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  3. Clip4

    Clip4 En-Route

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    If you are buying one who cares over 5 bucks. If you are buying a thousand things start getting clearer.
     
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  4. saracelica

    saracelica Pattern Altitude

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    Let's say for argument you're buying hundreds of the item.
     
  5. Ravioli

    Ravioli Final Approach

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    Your example is a 25% premium for being nice. I probably don't need to be treated THAT nicely.
     
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  6. MauleSkinner

    MauleSkinner Final Approach

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    Is the customer service issue likely to cost more than the price difference? (You have to stop whatever it is you do because you can’t get an issue with the vendor resolved quickly, for instance.)
     
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  7. Sinistar

    Sinistar Pattern Altitude

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    So in your scenario is your company buying this item from one of the 2 companies and then your company selling it to the end customer or are you embedding it into a larger final assy.
     
  8. Jumpmaster

    Jumpmaster Pre-takeoff checklist

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    Best value is the answer. If you just make a decision on price, you may end up regretting it. Best value takes into consideration a lot of factors: price, delivery schedule, quality of the product, first pass acceptance rates, QA/QC program if one is required (so as to avoid counterfeit products if that is an issue), warranty and related remedies, etc. If you buy 500 widgets at $20 but have to return half of them because they break during your assembly process, you’ve gained nothing and lost a lot. By the way, you can take the best value concept too far - look at MilSpecs as an example or some of the commercial requirements in a number of industries, e.g., medical or nuclear. In some of these instances, getting the paperwork right is often more important than whether the widget works as designed.
     
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  9. bflynn

    bflynn Final Approach

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    Total cost of ownership, which can be annoyingly difficult to arrive at.

    How much does the initial acquisition cost, including “price creep” of the i trial project. Then add in maintenance cost, own staff to support, increased handling, etc.
     
  10. Chip Sylverne

    Chip Sylverne En-Route PoA Supporter

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    Fear is the poison of our lives.
    Define service sucks. They don't return calls or emails in a timely manner, or they miss delivery deadlines. The first I can live with, the second I can't.
     
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  11. 455 Bravo Uniform

    455 Bravo Uniform En-Route PoA Supporter

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    Commodity? Best price.
     
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  12. FormerHangie

    FormerHangie En-Route

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    In my experience, businesses are looking for the lowest price for a good enough product or service. You might be able to sell business owners on a higher price if they are very intimately involved with the part of the business and can see a good return on investment that the improved level of service provides, but I wouldn't plan on basing a business plan on it.

    Generally what is easily measured is what gets counted, and cost is much easier to measure than is productivity. If indifferent customer service just gives some worker bee a headache or forces some salaried employee to put in some unpaid overtime, management doesn't usually care about that.

    Generally, improved service is worth something to wealthy individuals in their personal lives, but for most businesses cost is a bigger factor.
     
  13. Heftiger

    Heftiger Pre-takeoff checklist

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    Depends on who’s making the purchasing decision too. If it’s not the end user, the purchaser might not care about the service.
     
  14. ebetancourt

    ebetancourt Pre-takeoff checklist

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    A related thought: If the difference between two choices is X don't spend 2X analyzing the choice.
     
  15. Stewartb

    Stewartb Final Approach

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    How many of the responders are entrepreneurs?

    When my business depends on suppliers? I go to the ones I can trust will perform. My customers will say the same about my company. Low price is rarely the best value.
     
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  16. JOhnH

    JOhnH Touchdown! Greaser! PoA Supporter

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    Depending on the item, price might be the biggest factor, but it isn't usually the only factor. Quality, service, support and other factors can easily overcome a low price.

    How did that saying go? "The sweet taste of a low price is soon forgotten, but the sour taste of poor results goes on and on". Or something like that.
     
  17. Huckster79

    Huckster79 Line Up and Wait

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    My industry was a race to the bottom so we compete on low low low all the time. But for those that supply us it’s gotta be thought through... part of being able to operate on thin margins is not having to screw with things down the road... so it depends...

    We are thinking of investing a couple months of not being out getting new biz to switch all our customers from one of our platforms we sell to another due to one over time become a complete pain in a$$ to deal with... but what we lose in productivity over long term dealing with company a will cost us more than the couple months invested switching em over. There’s no “on paper” price difference
     
  18. denverpilot

    denverpilot Tied Down

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    Let’s be real, we buy stuff for work from Amazon and never talk to anyone, ever. LOL.

    But not enough info to go on. If I’m buying a commodity item, nowadays it really is Amazon. We keep drawers full of Amazon Basics cables, adapters, and such in the IT dept. They’re reasonably priced, decent build quality, and nobody has ever complained about any of them.

    If I’m buying a $70,000 phone system with $30,000 a year in licensing fees and support contracts, you’d better show up as a personal reference from someone I know and better not say anything that would make me not trust that you have my best interests at heart, even if you’re making a decent profit.

    In fact you’d better be making a decent profit because I know how support budgets work, and if you’re not making enough money on me, you aren’t hiring enough support staff.

    An example of something many buy but won’t always do on price is print shop work. We run one of those. A print shop that does everything bottom dollar and has no margin won’t be able to quickly fix a mistake YOU made and still deliver the product after hours, or whatever needs to be done.

    But if you’re really broke, you’re really broke. Go with the cheap one. We won’t print the job that cheap. We’re not huge amounts higher but we aren’t Kinko’s self serve either.

    It has a lot to do with how tight your budget is and what you can put up with, and whether the vendor being a pain actually causes you any business risk.

    All sorts of other variables. My boss likes to buy from companies that give him polo shirts. Hahaha. Not kidding. He doesn’t realize I’ve noticed it but if literally everything else is equal and we have a hard time picking a vendor, the one who gave him a shirt, wins every time. Hahaha.

    I had one customer when I was a vendor who demanded we buy him golf balls. He was the subject matter expert for a particular telecom specialty at AT&T. I always brought him golf balls. Even if I couldn’t get company ones. I’d have bought those stupid balls with my own money if I had to, but my boss knew what was up and even in low marketing years with no company golf balls, he never once turned down my expense report with golf balls on it. LOL.
     
  19. PaulS

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    Price is important, but talk is cheap. At the end of the day being able to deliver what you said you would on time wins the game. Had many customers leave to cheaper competition only to come back in a tizzy when the competition screwed the pooch. Didn't work that way all the time, but there are some chump companies out there.
     
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  20. mwagg737

    mwagg737 Pre-takeoff checklist

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    Numbers matter, but reliability is key in my book.
    When I turn a property, I need it done yesterday. That comes at a premium.
    I have tried the other way with disastrous results.
    Nope, cost means something, but it's not the end all beat all.

    Sent from my Pixel 2 XL using Tapatalk
     
  21. IK04

    IK04 Cleared for Takeoff

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    1. Assume all customer service sucks.
    2. If the item is a commodity widget and everyone sells the same one, go for lowest price.
    3. If the item requires customization and therefore costs vary between suppliers, see item 1.
     
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  22. SoonerAviator

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    Or, depending on your needs and desire for risk mitigation, you can use both suppliers if using the cheaper widget sometimes results in downtime. Having a secondary supplier can help avoid downtime related to Quality or OTD/Capacity constraints.