Robert Koci
How do you fire a client?
Canadian Contractor canadian contractor featured kitchens torontoYou ever have a client you just can't work for any more? How do you end the relationship?
Once again, a great letter from a reader asking a question I am sure many of you ask yourself and many have a good answer for:
Rob,
I’ve been following the Canadian Contractor website, great information and articles.
I got a topic that I never really seen anyone cover.
How do you fired a client?
I know it does sound right but sometimes you start a job and everything start great but you start to realize that the client is not worth the trouble. I not talking about walking away with the job not finished, I always finish what I start, but the same client keeps calling asking you to do different projects.
Do you jack up your rate till they doesn’t want to pay you, or do you stop answering there messages? or is better communication needed. I don’t what them to get angry at me but I’m tired of how they keep trying to push down my price, they obviously don’t value the price they put on my work.
I’ve started my company about 2 years ago, I might do $150,000 in sales this year, so we are not talking major additions, but smaller kitchens and bathroom and repair work.
Steve H
Toronto
What do you think? How do you fire your clients?
Steve:
Here’s my two cents:
If you are doing many small jobs and your company relies on word of mouth in a small market, this is indeed a critical issue. To a degree, you need to control the message this client will be sending to other potential clients in your community. That means making sure the split is relatively amicable.
One thing to keep in mind in deciding what to do is this; sometimes, this type of client is not one you need a good reputation with anyway. People they talk to may know them well enough to understand that they are difficult people in general and, though they will express their sympathy, will be thinking more about the extraordinary lengths you went to to satisfy their need despite their unproductive attitude. My point: You don’t need to worry as much about what they are going to say as you think.
Having said that, you must first decide what kind of reputation you want to leave. You might be content with “cheap, but difficult” but I am not sure that is a good long term strategy. Better, I think, to be “expensive but excellent.” In my mind, that means making sure you give them a price that reflects your enthusiasm in taking on their work. Don’t go crazy and give them a price that will allow them to condemn you for being flagrantly unfair, but one that is an honest appraisal of what you think it costs you in the long run to deal with hassles you inevitably get from them.
And whatever you do, don’t worry about them. They will be move on with nary a shudder to find someone else to beat up. Regardless of how the relationship ends don’t give the relationship a second thought. Move on to satisfying your better customer’s needs.
Victoria Downing, President of Remodelers Advantage Inc., is a leading authority in the remodeling industry. Remodelers Advantage is based in Laurel, Maryland.
Steve, first question – is the issue only the negotiation on price up front? In other words, if you could get a price that makes you really happy, would you want to work for this client? Or are there other issues that make them be the “client’s from hell?” If there are other issues, simply tell them that you don’t feel your company is right for their project and offer to refer them to the local industry association so that they can find the right contractor for them. If they continue to ask you, simply repeat until they get the message.
If it is simply the up front negotiation on price, be up front with them. It’s your job to be clear about how you work and quickly stomp out their habit of pushing you to do more for less.
When they next call you, say, “I’ll be happy to create a proposal for you for this project but in the past, I’ve felt that you have not valued the expertise I bring to the table. I want to be frank. If you are looking for the cheapest price, I am not going to be your guy. In the past, I’ve felt that price was the most important consideration for you. So perhaps it would be better if you found another company.
If, instead,you’re looking for acompany that will deliver great quality and top customer service, along with the expertise and experience that I bring to the project, I will be happy to create a proposal for you. My policy is not to negotiate on price so the investment amount that I develop is the amount that I feel is needed to do the job right, to help my company be stable and around in the future so that I can continue to service you. We can work together with your budget to give you the most value possible and we can find ways to lower the investment amount by changing the scope of the job if necessary. Now, please understand that it’s fine to say no, do you feel that there is a fit between what you want and how I work or would you like me to refer you to another company?
Then stick to your guns.
Firing a client depends on why you don’t want the client. It sounds, in your case, that your issue is that you are not making enough profit on previous jobs because you have given discounts, so you don’t want to do any more work. This is totally understandable as you deserve to make a fair profit for the work that you do.
Communication is always the best answer. In this case, talk with your client about how you like to work with them and that you appreciate that they want to continue working with you. It’s important to have the right mindset. There is nothing wrong with a prospect asking for a lower price. Negotiations are a part of business life. Don’t take it personally. Since you may have discounted in the past, the client is conditioned to ask again.
Nobody but you knows your true costs, so you can’t afford to let a client put you in a position where you don’t make enough money. You have to communicate with your client that this is the price for the work that you are quoting on. If they accept your proposal, then get a contract written up and signed so that you both know the scope of the project and the price for the work. It is also important that the scope of work be extremely detailed so that there aren’t any questions about what is included and what is not. Don’t negotiate the price. It’s OK to negotiate what you are going to do, when or how you are going to do it, but not the price. If they ask for a discount, just politely say that you’re sorry, but you can’t do the work for less.
If they don’t want to pay the price that you want, you don’t have to do the work. Thank them for the opportunity and wish them well with the project. Let them know that you will be happy to work with them at the prices quoted if they change their mind. In most cases, they will be surprised that you stood your ground and will accept your proposal.
So I talked to the client, after looking at some small repairs she wanted me to do. I knew she would probably try to talk me down in price, So this time I told her that I am now charging a minimum half day for my work. My repair hourly rate is higher than what I pay myself so it does work out to a full days pay for me.
Her response was, oh I guess I will call you back when we have more work for you, and I have not hear back since. Hopefully she calls someone else next time.
Thanks for your help.