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Negotiating

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Negotiating
December 22, 2010
1:48 am
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Rob
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December 21, 2010
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Do you have a particular method that you use when a prospect wants you to lower the quote you have already provided? Do you go in a little high to give yourself some room to lower, or do give the best quote from the start. I am over 50 have been laid off from my job for almost 2 years and plan to launch my courier business soon.

December 22, 2010
1:50 am
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Bob Lavendusky_1
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December 20, 2010
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Hi Rob,

Negotiating can be one of the most difficult parts of starting your own courier service. As a new business owner there will be the temptation to lower prices to get new business, and that may be the best way to get your first clients under your belt. It is definitely the way I started. I tended to drop my prices at the first hesitation of a potential client. There are pros and cons to this method. the pros: can quickly acquire clients and build a reputation for dependable and affordable service. The cons: not enough profit margin, and feeling like you are working your tail off for your clients and not being compensated enough for it, can easily start to feel resentful towards your clients and not provide world class service. Which could lead to a bad reputation, and as a service business, your reputation is everything.

My suggestion, like you said, is to give a slightly higher quote, and give the client some room to lower. If they get the price down they will feel like they negotiated a good deal for their company, and because you quoted a little high the lower price will probably be near the price you would have quoted to begin with, everybody wins! And if they don’t try to lower the price, all the better for you.

Quote the price with this question in mind: Would this price be high enough if I had to pay a driver to do this and make a profit myself? When I started out, I quoted very competitive prices because I did all the driving, but once I started hiring help, I found my prices were too low to pay the drivers a decent wage and have enough left over for profit.

My other suggestion is to check with your other local couriers and find out what they charge for various types of deliveries. This will give you a very good idea of what a competitive price would be for you to charge. Anything much cheaper than the competition and you will probably not make enough profit to stay in business, and anything way more expensive than them would probably price you out of the market.

I would also suggest exploring some niche markets that are highly profitable, very time sensitive, and involve very expensive products and therefore these clients are looking for a courier they can completely trust with their important deliveries. ie Banks, and Pharmacies. I specialize in private contract pharmacies. These are pharmacies that are not open to the public, don’t have a storefront, and deal with large institutional clients (such as nursing homes, group homes etc). The great thing about private pharmacies is: they are usually very inconspicuous, they are typically located in cheaper office space and usually don’t even have a sign. Why is this good? because your competition probably doesn’t know about them either! Typically they do have a listing in the yellow pages, so they are not very difficult to track down.

Best of luck to you, let me know if you have any other questions.

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