A client of mine recently lost a sale to a prospect who told him that while his work was the most impressive of all the companies bidding for the business, her point system for judging eliminated him because of the weight placed on costs.
Instead of being upset, however, my client was happy to lose the business. “We offer more value for the kind of work we do than the cheaper vendors who win on price alone,” he told me. “And we wouldn’t have made any money at the price level they needed us to be.”
Unless your business model allows you to compete effectively as a low cost provider – meaning that your cost structure actually is very low – you should never feel pressured to compete on price. When you offer a highly customized product like my client does, you need to compete on value and stand behind it. In other words, be okay with walking away.
This particular prospect saw the value my client offered but wasn’t willing to pay for it. And my client wasn’t willing to offer the same value he provides to other clients, but at a lower price. Why should he? All that would do is erode his margins. When you have finite capacity, as most businesses do, whether it’s people, time or equipment, you want to be sure that capacity is being used to service your highest margin accounts.
Don’t dwell on unprofitable business that you lost. Move quickly to finding that next great client who values quality as much as you do.
