Negotiation – A Profit Strategy

Negotiation is the most important business skill we’ll ever master, yet it is often among the missing in our profits tool box. We think of labor productivity, equipment, and techniques, as our stock in trade. Certainly, all these are mandatory resources to prosper in the business, but none have the single largest impact on profits, cash flow, and long term viability as negotiation does. 

Negotiation is a mixture of business arts and sciences that works best when viewed as a set of economic principles. This cost centered philosophy rejects the price obsession that characterizes the business world. 

Negotiation is not an argument over price 

The financial reality is that a buyer will pay a higher price if it buys a lower Total Cost of Ownership (TCO). Disagree? Let’s first distinguish between price and cost from the customer’s perspective. For example, suppose you can buy one of two units priced at $750 or $500. If low price is the deciding criterion, no question, the $500 unit wins. However, if the higher priced $750 unit lasts for 2 years and the lower priced $500 unit lasts for one year; the $375 TCO of the higher priced unit clearly makes it the better buy. Lowest TCO is by definition the best value.

Quality, Service, Delivery, and Price (QSDP)

Our negotiation mission is to consistently demonstrate how our lower TCO provides better value to customers. The four elements of cost always present in our negotiations are QSDP. Any cost impact can be slotted in one of these categories. A better trained work force is Quality cost advantage. Superior warranty due to better materials and design are Service cost advantages and a better schedule due to planning and personnel cost advantages constitutes Delivery savings to the owner. 

The most frequently cited, yet most elusive goal is to remove price a bargaining point from the negotiation table. It will happen when we focus our negotiation efforts on the lowest TCO for the customer.

Hot Potato tactic  

Instead of stressing lowest TCO in the work-a-day world, we fall prey to our own lack of negotiation skill. Here is how the customer out-negotiates us with the Hot Potato tactic. He invites you to his office to “negotiate”. He makes you comfortable, shares a little small talk, then looks into your eyes while intoning insincerely, “Your Quality, Service, and Delivery are all top notch or you would not have a seat at the table – so it call comes down to Price. What can you do?”   

In one smooth maneuver, the customer has buttered you up and crammed the Hot Potato of Price down your throat. If you swallow it whole, you may convince your self that the customer appreciates your higher value and “in this Price competitive market“, you must lower your price.   

He won everything, getting the lowest cost and a lower price. Negotiation is never just a matter of Price. Furthermore, for the same reason that we do not buy heart surgery from the lowest bidder (who even compares prices), the other cost advantages of QSDP are more important. Any professional buyer knows for an absolute certainly that she can always get a lower price. He also knows that a low price often come at a high costs.   

Strategy over Tactics

The uninitiated think of negotiation as the deft application of tactics and parrying of counter tactics. Certainly, that is part of it. But the focus on TCO yields far better results for these reasons:  

1.     The customer is best served by the lowest TCO

2.     TCO puts all four cost balls in play at the same time, giving us quadruple the negotiating power

3.     Everyone knows that higher quality comes at a higher cost – just ask that cardiac surgeon

Some customers will not care about lower costs and only want low prices. You must decide if you want this type of business for what ever strategic reasons you have. There will be customers that you do not want to serve. There is nothing wrong with that and indeed everything right with it. When we delude ourselves into thinking that we need the sale, or the cash flow, or other ways we convince ourselves to take a sale at a loss, no negotiation skill will rescue us from our selves. 

HVAC industry: surviving your slow season in 2022

HVAC is a seasonal business, so while you may not be able to keep up with the demand for your services in summer and winter, there will always be a quiet period. But even when business is slow, you can find ways to increase revenue and use the time productively to plan for your next busy season.

Start preparing for your busy season

With extra time on your hands, use your slow season to prepare for your peak season. Hire and train new staff during this period, so they’re ready to take on jobs later in the year. With a team of knowledgeable technicians, you can start the next season successfully. It’s also a chance to upskill your current employees and send them on training courses. Take the opportunity to create special offers and early bird deals for services popular during summer and winter. You could also focus on asset maintenance, a time-consuming and challenging task to complete when your team is in the field. Schedule maintenance jobs during your slow season to prepare your equipment for the rest of the year.

Review your marketing strategy

If you don’t always have time to focus on marketing, use your slow season to review your marketing strategy and create a plan to achieve your goals for the year. Decide how you’re going to use email marketing, social media, and your website to reach your audience and generate leads. Use social media to promote preventative maintenance to encourage clients to book service or maintenance checks, share blogs on your website with helpful information for customers, and use email marketing to boost brand awareness. As soon as summer or winter approaches, customers will know who to call when they need an HVAC expert.

Promote preventative maintenance

Create service and maintenance plans for customers to boost revenue during your slow season. As services are beneficial for customers, it will be easy to persuade them to purchase these plans. Start promoting service and maintenance plans just before the end of summer or winter to remind customers how important maintenance is during autumn and spring. You could also offer discounts or free services for people who buy your plans. Promote the benefits of preventative maintenance leading up to your slow season to encourage clients to book service and maintenance jobs in-between summer and winter.

Use HVAC Software to manage your recurring maintenance jobs

Maintenance will be your priority during your slow season, so use HVAC Software to create and schedule recurring maintenance jobs to avoid creating them manually. With HVAC Software, you can set jobs to recur daily, weekly, monthly, or yearly, and the job will automatically be added to the system. The software will also be a valuable tool during your busy season. You can schedule appointments, manage your team’s diaries online, generate quotes and invoices from the system, and track your assets to ensure all equipment is either in the field or in storage, ready for the next job.

Using Rapid Prototyping for Rubber Keypad Product Presentations

When creating a new product that contains custom rubber keypads, designers can use a rapid prototype as a representation before the final production. It’s useful in showing people what the product will look like. Although it can’t be used in the field for real-time situations, the detailing is at least 95 percent in comparison to the final version. Rapid prototypes are available in about two to three weeks, which is a faster lead time than most final production times. This allows the designer to use it as a visual tool in presentations, beta testing and for marketing materials. It’s helpful in a variety of industries, including auto parts, space flight components, industrial equipment, electronics, telecommunications and medical devices, to name a few.

Explaining Function
The old adage says that a picture is worth a thousand words. This is especially true when trying to explain how a product works. A rapid prototype can be used with demonstrative slide show presentations to show people what the silicone molded keypad will look like. A number of studies show that an audience will pay more attention to speeches and sales pitches when there are interesting images involved. Photos of the silicone keypad prototype can be included in a slide show or live presentation to keep the audience engaged and help them understand the functions and talking points of the design.

Beta Testing Groups
When showing the silicone keypad prototype to potential users in beta testing groups, the designer can get valuable feedback. This is an opportunity to address questions and concerns about the product while there is still time to make changes in it. Different base colors and keypad printing samples are helpful in fit, form and function analyses. The end user is often able to provide insight that the creator might not think of during the original design process.

Marketing Materials
One of the most important parts of launching new products is marketing. Brochures, commercials and printed images for storyboards are critical in devising a marketing campaign. One drawback is having to wait for the final production to be completed before the marketing campaign can be implemented. A rapid prototype is a suitable solution, acting as a stand-in for photos and commercials. It’s also ideal for trade shows, where potential clients can look at it up close for details and to achieve a better understanding of the concept.

Gaining Investors
It can be difficult to portray an inventor’s vision to a group of potential investors. Showing them what it will look like can be a determining factor in bringing them on board with financing. A silicone keypad prototype shows how big it will be, what color options are available and how the various parts of the product line up together. It makes the vision more tangible.