Busy, busy, busy in the marine leisure industry

[Blue5]

Unless you are in the same industry as me (regardless of what it may be) then I don't really see how you can say that a job is worth less than I state as you would not know my overheads, expenses or, indeed, see any pitfalls in the work that may be unforeseen by the customer but come with experience of doing the job. However, if you are in the same industry then I would ask why you are not doing the work yourself.

All too often when customers say "That's too expensive" what they really mean is "That's more than I want to pay." or "That's not what consumer television programmes have led me to believe I should be paying."

Funny how they always want to haggle with tradesman charging £20 per hour but don't bat an eyelid at being charged £200 per hour by the solicitor.............

 

[Barry Jones]

No its not that busy at the moment.

 

[pugwash94]

Unless you are in the same industry as me (regardless of what it may be) then I don't really see how you can say that a job is worth less than I state as you would not know my overheads, expenses or, indeed, see any pitfalls in the work that may be unforeseen by the customer but come with experience of doing the job. However, if you are in the same industry then I would ask why you are not doing the work yourself.

All too often when customers say "That's too expensive" what they really mean is "That's more than I want to pay." or "That's not what consumer television programmes have led me to believe I should be paying."

I work as a consulatnt which immediately puts me in the hated category - however....

Sellers have to recognise that the price they decide to charge should not be set by reference to their costs but by what the particular market, market segment or individual customer is prepared to pay. Some customers may be prepared to pay more than others, some segments more than others.

The initial reaction to this may be that it is dishonest but think...

As a customer I am not interested in what my supplier's particular overheads are. If there are two suppliers who appear to be equally capable but one is charging more than another I will probably select the lowest price.

Actually, what I am interested in is the value of the goods or service to me.

Suppliers have to recognise that price is determined not by their costs but by what the market (customers) regard as acceptable.

What is true, is that suppliers have to know the minimum price they can afford to accept.

Unfortunately most cost and management accounting approaches drive companies to make irrational decisions. For example because companies typically pay time and a quarter/half for their overtime they cost any job that involves overtime at 1.25 - 1.5 times their overhead recovery rate - so £30 per hour rises to £45 per hour. While their labour costs have only risen by £5 or £6 per hour

However, their overhead recovery rate has already covered all their fixed costs so actually any work done in overtime is all Net Profit not just increased Gross Profit. So where they were making say £3 per hour for the work in standard time they are actually making perhaps 10 times that for any work that is additional to the work done utilising overtime.

Sorry for getting serious but our Marine Industry (actually most of British Industry) fails to think critically about business and recognise the major flaws in the models they adopt.

I would love our British Marine Industry to prosper but until they start to commit themselves to some hard rational thinking about how they operate we will see the likes of Beneteau, Jeanneau and Bavaria prosper while we continue to lose our industry and service companies will continue to moan about parsimonious customers while the rest of us complain about vastly over priced services.

Now...

... I've said it I'm going sailing - probaly Poole if the wind will give be a decent sail back on Sunday.

PS There are few things worse than a mono-maniac on a mission. I'm sorry!:

 

[wazza]

I asked a company, 3 man band, to quote me on how much it would cost for my decks to be replaced by the non teak, teak stuff that was 2 months ago... no-one has been in touch. Now obviously they could've lost my number and so on, but a note under the cockpit cover wouldn't be so hard.. I was in the shop talking to the guy for 1/2 an hour so I don't believe he could miss my boat.. I will be back in touch with them as I believe their product is the best...

Another thing I always would prefer would be a fixed price and not an hourly rate (not necessary boat job). As I want to know its going to cost so & so, then if the job is done quicker good for them, they earn more and I'm still happy. I have a brickie mate and he has said when he quotes fixed rate its always a little more per hr than hourly rate, but that's ok by me as I know what I'm getting and paying.. everyones a winner

 

[photodog]

I work as a consulatnt which immediately puts me in the hated category - however....

Sellers have to recognise that the price they decide to charge should not be set by reference to their costs but by what the particular market, market segment or individual customer is prepared to pay. Some customers may be prepared to pay more than others, some segments more than others.

The initial reaction to this may be that it is dishonest but think...

As a customer I am not interested in what my supplier's particular overheads are. If there are two suppliers who appear to be equally capable but one is charging more than another I will probably select the lowest price.

Actually, what I am interested in is the value of the goods or service to me.

Suppliers have to recognise that price is determined not by their costs but by what the market (customers) regard as acceptable.

What is true, is that suppliers have to know the minimum price they can afford to accept.

Unfortunately most cost and management accounting approaches drive companies to make irrational decisions. For example because companies typically pay time and a quarter/half for their overtime they cost any job that involves overtime at 1.25 - 1.5 times their overhead recovery rate - so £30 per hour rises to £45 per hour. While their labour costs have only risen by £5 or £6 per hour

However, their overhead recovery rate has already covered all their fixed costs so actually any work done in overtime is all Net Profit not just increased Gross Profit. So where they were making say £3 per hour for the work in standard time they are actually making perhaps 10 times that for any work that is additional to the work done utilising overtime.

Sorry for getting serious but our Marine Industry (actually most of British Industry) fails to think critically about business and recognise the major flaws in the models they adopt.

I would love our British Marine Industry to prosper but until they start to commit themselves to some hard rational thinking about how they operate we will see the likes of Beneteau, Jeanneau and Bavaria prosper while we continue to lose our industry and service companies will continue to moan about parsimonious customers while the rest of us complain about vastly over priced services.

Now...

... I've said it I'm going sailing - probaly Poole if the wind will give be a decent sail back on Sunday.

PS There are few things worse than a mono-maniac on a mission. I'm sorry!:

thats a very good post thanks!

We are trying to focus our pricing now on what the value is to the customer, as you suggest.. sadly there are potential customers out their who dont have a clear idea about the value of our products, and/or how the (For want of a better term...) price/value curve works... (ergo... spend to little and value is worse than if you spend some more... quality is so poor then the product is worthless.. or worse damaging.)

In the past we were busy enough to determine prices based on demand and our self determined position in the market...

This new pricing system is more costly to administer... and is dangerous as I am concerned that those customers who get more out of our products.. (place higher value..) may be unhappy to be paying a higher price than those customers who place a lower value but are recieving a product identical to the higher value customer... (Without whom our margins would be unsustainable..)

So, aside from attempting to enlarge the market at the high end... any tips as to how to manage this?

 

[Bosun Higgs]

The pendulum swings both ways!

Of course it does. But I cannot remember ever letting down a tradesman in the way you describe though I am frequently let down by them. The really irritating habits ( and we are talking work on the house here) are failure to turn upo at all to give an estimate, and turning up, promissing a quote and never hearing any more from them. How can this ever be efficient or justified? Yet it has to be near a 50% rate.

Also, some of us are happy as we are and don't want to big thank you very much.

Which feeds into reliability. How can a one man band ever be reliable with no backup resources?

 

[Barry Jones]

One thing I struggle with, is when I hear about companies who don't return calls or produce quotations when they promise them.

I don't get it at all. It's nice to think that they have more business than they can cope with, although I DOUBT IF ITS TRUE. Its probably more to do with a laissez-faire attitude to doing business.

I heard a story recently about a boat which employed a marine electrician to do some re-wiring work and fit some chargers etc.

When finished, the electrician disappeared without providing any circuit diagram of what he had done.

Then, without warning, he went off for 6 months and is uncontactable.

This is quite strange to me also as I always provide a circuit diagram and simply couldn't afford not to have my Blackberry with me wherever I go.

 

[Coaster]

...simply couldn't afford not to have my Blackberry with me wherever I go.

Does it work yet?

 

[photodog]

I wonder how much of this is down to the fact that no matter how hard you work in this economy (as a small business/ tradesman) ... your not really going to be making a lot of money... The extra effort that goes in at the top no longer appears to be generating the rewards worth the effort..

So there is more value for the small business/tradesmen to spend more time on leisure instead of work.. effectivley the cost of the leisure is lower.

 

[Lakesailor]

Sellers have to recognise that the price they decide to charge should not be set by reference to their costs but by what the particular market, market segment or individual customer is prepared to pay.

As a customer I am not interested in what my supplier's particular overheads are.

Suppliers have to recognise that price is determined not by their costs but by what the market (customers) regard as acceptable.

What is true, is that suppliers have to know the minimum price they can afford to accept.

Seems you like to press your message home.....

But actually you are missing a point. If you accept jobs in which your costs are too close to your price, then you may as well sit at home and twiddle your thumbs. Not everyone has similar costs, so those with high costs may feel they have to take on marginal work just to pay their bills.

The (as this was my field) photographer who has a big studio, staff and the latest equipment may have huge overheads compared to someone working out of a a home-based studio on his own with reliable old gear. Of course they will have different pricing structures. So the concept that Bosun Higgs propounds that being small is a sign of a poor tradesman is fallacious. It can be a concious decision to keep costs low and allow a better profit per job than bigger firms. It's just that you can't progress jobs as quickly or take as many on.

I always gave a price that I knew to be fair to both me and a potential client.
If they wanted to haggle, I wasn't interested.

Buying product may be different, but supplying a service, and it was photography in my case, you cannot compare others' prices unless you aren't really bothered about the quality of the job.
If you screw a service provider down on price and they accept that they'll probably just do less to fulfil the job. Then you'll be dissatisfied.

 

[westernman]

...
If you screw a service provider down on price and they accept that they'll probably just do less to fulfil the job. Then you'll be dissatisfied.

This is what many western companies do when negotiating manufacturing contracts in China. With the result you get rock bottom prices and poor quality.

For only a little bit more, you could have low prices and excellent quality from Chinese suppliers.

 

[Barry Jones]

I didn't seem to have too many problems with mine.
Its synchronized with my e-mails and I can get them other ways as well.
The phone never stopped working.

Does it work yet?

 

[dylanwinter]

humble apologies

Dylan, that's very direct, but certainly points worth making. And points allowed to be made by such a respected forum elder orator.

Obviously no offense taken in spite of the provocative nature of your post. One mustn't rise to it these days otherwise we would both risk getting banned for arguing in the forum!

I am however a bit surprised , that your first thought is to suggest that the customer is somehow faulty (non-payer, artisan-damaging bargain hunter etc), or not fit for purpose (haughty expectations, not grateful enough).

But to answer your question, I can't be sure about how I am regarded. Notwithstanding my ignorance though, I shall ask around and alter my behaviour if it proves not to meet the standards you suggest.

Cheers

Garold

Ps. Dylan, what if one does all you suggest and becomes an industry-approved-customer, but still has the same predicament? What would be your explanation then?

humblest apologies G,
did not mean to offend

It is just that the customer/client relationship is a strange shifting thing.

Having just spent the morning doing some sea shots for a client (Gormley art installation) I can say that some work/clients are is obviously better than others

so I was veery pleased to be able to combine a pleasant morning on weels bar with paid work

there are other jobs, other clients where pleasure and work are a long way apart

Dylan

 

[Searush]

Of course it does. But I cannot remember ever letting down a tradesman in the way you describe though I am frequently let down by them. The really irritating habits ( and we are talking work on the house here) are failure to turn upo at all to give an estimate, and turning up, promissing a quote and never hearing any more from them. How can this ever be efficient or justified? Yet it has to be near a 50% rate.

(snip)

That was exactly my experience - over several household jobs & what prompted me to post. When employed & self-employed I NEVER failed to respond to a customer's or bosses request. I cannot understand why anyone would simply try to avoid paid work - especially in the current economic environment.

I don't like the approach that the customer is always at fault. I have had bad customers from time to time, but most come round when you point out that they are welcome to look around & come back if they find I am right. Most came back. If your quote is as low as it can sensibly be, simply stand by it & explain the issues to the customer. If not, negotiate, maybe reduce what you provide to meet the customers budget.

 

[Barry Jones]

In terms of negotiating better prices, it depends on what its for.

Hourly rates are hourly rates. Bigger jobs with a fixed price are more negotiable.

However, sometimes, I've spent longer than expected on a job, scratching my head about a particular problem and I've not charged for that time, if I feel that its not fair to penalise the customer for that.

Also, I don't charge for "drinking tea" time. My regular customers often like a cup of tea and chat about boats !!!

I also get them call me up or send me e-mails looking for advice - I just consider that good customer service.

 

[dslittle]

Perverse ?

In terms of negotiating better prices, it depends on what its for.

Hourly rates are hourly rates. Bigger jobs with a fixed price are more negotiable.

However, sometimes, I've spent longer than expected on a job, scratching my head about a particular problem and I've not charged for that time, if I feel that its not fair to penalise the customer for that.

Also, I don't charge for "drinking tea" time. My regular customers often like a cup of tea and chat about boats !!!

I also get them call me up or send me e-mails looking for advice - I just consider that good customer service.

I cannot believe that I am writing this but earlier this year in Portland I needed some eletrickery done. Someone who I trust suggested a marine electrician who came around promptly and gave me an estimate based on their hourly rate. I asked him to do the work (which he did urgently to help me) and at the end he asked me for some money.
Based on his hourly rate, I thought that he had undersold himself massively and as a result I gave him TWENTY PER CENT MORE than he had asked for. I know that is mad, I still don't know why I did it - well I do really, he was very good, very quick (turning up, he was still thorough) AND very nice. Similar work at my local marina would have easily cost twice as much (including haggling). As a customer I felt that I had received value for money and I will save any future electrical work to incorporate into a trip along the coast.
Now I don't know his margins or if he will still be in business next time I go there but I will certainly use him again and recommend him to others.
Oh it was Kev on 07968 731267 - no connection etc other than above.

 

[Lakesailor]

I see nothing wrong with paying more than asked for for really excellent service. A lot of small one-man-bands don't have a very good idea of the value of their work.
This is because everything is cheap, cheap, cheap and they get misled into believing that they need to compete on price.
Like Searush, when I was self-employed I always communicated, gave quotes and if successful, did the work without any delay. If I didn't want the job I would tell the prospective customer. I could always give an excuse like I was committed elsewhere or it wasn't my sort of job.

 

[Boathook]

Some customers tend to get the service they deserve.

If that sounds harsh please let me explain.

The key factor for many buyers seems to be price. I rarely hear people deciding to pay more for an item because the seller is particularly cheerful and competent. The net result is driving down of service standards.

We use a local chandlery for numerous purchases, especially day-to-day relatively low cost items. I could buy many of these items online and perhaps save 20% or so. I choose not to as I value the service provided.

There are various price comparison websites. Perhaps what we need is a standards of service comparison.

Not to sure about the service they deserve but I do try to support my local chandlery for small price items but if I require expensive items I do normally hunt around for 'best' price and this includes do they have the item in stock.

 

[Barry Jones]

Recently I noted that a boat owner on the net was telling everybody that its getting very difficult to find a decent marine electrician (which actually isn't the case).

I know he has spent the best part of a week trying to get well meaning amateurs to fix his electrical problem on forums rather than pay a professional to fix it.

Not surprising that its getting hard to find people in the trade is it ?

 

[pugwash94]

thats a very good post thanks!

So, aside from attempting to enlarge the market at the high end... any tips as to how to manage this?

Yes!

The problem is to differentiate the product or service delivered to one market segment from another.

When we look at the problem, we carry out a very detailed analysis of the market to understand these - actually we tend to provide our clients with the way of doing this themselves.

I say analysis - we tend not to ask our clients' customers what they want because in most cases they have not identified what would really benefit them because they do not know what could be done (our client hasn't identified this himself so his customer cannot be expected to have thought of it) and the client's customer tends not to have analysed his business in a way in which he has identified what will really benefit him. - So it is not simple!

However...

One way might be to look at timing. If I guarantee to do the job within say 24 hrs, I might charge a premium rate, within one week - a mid level rate and within the month - a low rate.

It may be that I actually do the lower rate job within a couple of days because I have spare capacity, in which case I am highly regarded. But I always do the job within the timescale so the higher paying customer always gets what he ordered.

This is a little superficial. If you want to explore it further then investigate "Theory of Constraints" on the net or contact me directly.

All the best