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A Thermoforming Budgetary Quote?

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We often receive requests for a budgetary quote.  On the surface it would appear that the client might be asking for a quote that fits within their budget.  So, it would be tempting to jestingly reply, “Be glad to give you one, what is your budget?”

However, we must understand that a budgetary quote for a thermoforming project is a very situational request.  Thermoforming companies wrestle with this request in many different ways.  They think several things:  “Does the buyer want my quote so they can use it as leverage against a company with whom they have been working?”   Or, “How much profit should I build in to make this a worthwhile project for us?”, or, “Maybe we should give a low ball quote in hopes that if we win the business we can make it up by charging more later on.”  Often, they reason that, “I will quote a high price so I have wiggle room when the client tells me we are too high.”

This ritualistic game continues to be played year after year by buyers and sellers of most products, not just with thermoforming companies.  So, we asked some members of the Sales Masterminds Group on Linked In to weigh in with why they thought buyers request “budgetary quotes” instead of actual quotes.  Here are some of their responses:

“Generally a request for a quote is a buying signal and commitment should be received before providing the quote – if there is not commitment and the quote is provided, the probability of the sale diminishes—all the good work done up until that point may be lost”.

“If I have a strong relationship with the customer, I would ask them a question along the lines of:  what likelihood is there of this project going ahead/what level of work would you like me to put into submitting the quote?  That will give you a very good indication of whether this is wishful thinking or a defined project.”

“In our view, you have to appear at least intelligent and interested in the success of your prospect’s inquiry and therefore have to do some work.  To that end, you should provide a price that will have (5-10%) slack in it for you to move around in as you sharpen the focus with the prospect.”

(You can read these comments and others on Linked In at the Sales Masterminds group.)

These are wonderful insights.  But do we need to understand what is really going on here?  Is this simply an exercise in gamesmanship in which the buyer is vying for the best possible price and the seller is trying to figure out how to win the business while ensuring the largest possible profit?  Is this price/profit process always honest?  How often does the buyer tell the seller, “You are 20% higher that your closest competition”, when, in fact, that is not true?  How often does the seller tell the buyer, “We have shaved off every penny we can to ensure that you have the best possible price”, when it is not true.  So, in most cases both buyers and sellers are guilty of the same cat and mouse game.—they are simply trying to win the best possible outcome for their company.

Is it possible to do business differently? Would it be possible for the buyer to tell the seller that the he or she has to be able to sell their product for $X and that that the seller must produce their part for X% less than that?  Conversely, would it be impractical to think that the seller could possibly tell the buyer that he/she has to sell at a certain price in order to make an X% minimum profit?

Would it be possible for both buyers and sellers to engage in total transparency so that they can both “win”?  Or is that totally impossible because of a lack of trust each has in each other?  If so, does that imply that this business relationship will be built on a foundation of mutual mistrust?

What would happen if the seller asked for quotations with the stipulation that the winner would win if their price was the best and they demonstrated that they truly addressed the buyer’s needs, proving that they were the most qualified vendor.  So that in order to win, the seller had to show value and a realistic price.  Could we expect the buyer to submit a list of qualifications, other than price, that the seller had to demonstrate?  Could the winner be the seller who had the highest score on value and the fairest price?

These and other questions have plagued buyers and sellers since the first buyer asked a seller for a budgetary quote (or any type of quote for that matter).  The effectiveness of the buying/selling relationship depends on a clear understanding of the goals that are important to each.  Often, the buyer’s goal is not just the lowest price.  Likewise, the goal of the seller is not always to make the highest profit.  There are a myriad of factors that influence each buying and selling opportunity.

Perhaps it is time for both buyers and sellers to rethink each other’s real motivations through a process of trust and respect.  The goal should always be to ensure that both buyer and seller can help each other attain their business goals.

That is what win-win is all about.

 

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