Real Life Example

Purposefully underpricing to gain volume or a ‘name’ customer will never result in long-term, solid success.

Our client, *Paul, from Portfolio Staffing, was going through a seasonal lull. He learned that a Fortune 100 company that had been on his target list for years was set to issue a Request for Proposal. He knew the incumbent firm was already providing services at a rate lower than his typical markup, but he wanted that contract.

Sharpening his pencil, Paul decided this would be just the ticket. He could add a prestigious Fortune 100 name to his portfolio and pump up his volume during the lull, all in the hopes of “making it up in volume.” He also thought he could negotiate a better rate once he dazzled the customer with his performance.

Reality check! If you’re providing your staffing services at a losing rate it does not matter how many positions you fill, it’s still a loss. Also, corporate buyers are looking to pay less year over year, not more. They expect more value and less expense once you’re in the door. There is nothing wrong with walking away from an unprofitable opportunity. Paul reevaluated the value of his services and bid a rate that would earn him a fare profit. It turned out that the Fortune 100 company liked his confidence and value proposition, realizing that their original expectations were not sustainable.