Why low cost buying leads to poor results and how to change it

by | Aug 31, 2009 | Business Insights | 0 comments

I am used to aim for a win-win solution when selling services to a client. And win-win means that both parties should profit on the cooperation. Recently, I had to conclude that this strategy does not always work that well. Especially in Poland I had to conclude that buyers are too much price focused. But for sure this is applicable not only to Poland. Time for a change? And who will change?

Low cost buying has a history

People around me already warned me about the Polish buyers’ mentality in advance. But of course I did not want to listen, I wanted to find out myself. I have given it a try for over a year, but now I have to agree: Polish buyers tend to decide mainly based on price. Basically, I even understand their attitude. Knowing where this country is coming from it’s not strange that people care a lot about money. Anyway, in my opinion it’s time for a change. People will need to start looking more for the value of an offering and not only the price should be the leading motivator.

How to compare apples with pears?

Even for a very simple project they request 10 suppliers for a proposal. The request is often hardly specified. Therefore, it will be impossible for the buyer to compare the proposals. And after all, it often occurs that the buyer even doesn’t have a budget. This way of working is very costly and time consuming for the suppliers and does not give the best result to the buyer.

The effect of low cost buying

In some recent projects I really couldn’t find any margin anymore. To get the deal we had to go below salary cost level, not to mention profitability level. It doesn’t need any explanation I guess how unhealthy that is. Therefore, we decided not to do it. As a professional company we do not want to be compared to freelancers who hardly have to pay any social and tax fees. We also have our pride. Some projects probably were finished in a proper way. On the other hand, we know that some of them were not uccessful. Knowing the above I think this is not so strange. In real life only the sun shines for free and may be you will get the peanuts for free next to your beer in the bar, although in most cases you will also have to pay for them.

It will be hard for the buyers to change

To be honest, I am afraid that most buyers will not change in the upcoming time. Because they are not only cost focused, but also the trust level in Poland is rather low and the importance of mutual trust I already described before. Therefore we decided to change. Without getting to know the client we are no longer sending a proposal. After receiving the request for proposal we phone the client. If they don’t want to talk, fair deal, but then we don’t offer. Fortunately, some people seem to understand what we are aiming for. They invited us for a meeting, we had a workshop together and, as a reuslt, we both knew what we were up to.

Not in all cases did this lead to a deal, but in all cases both sides were satisfied with the result. At least we were able to show the value we can add to their business! They let us share our inspiration and creativity to add value to their business. And that’s what it is all about in modern business. At least for me.


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