Here's a good one. Interested to hear the opinion of others on this board...

A customer signed up with us the other day (referral from existing client.) He then calls us and says, "My current host offers me 1.5GB of disk space for $22.95/month. Can you match this?"

Now wait a minute, I'm thinking. You already signed up with us. What's the deal?

I ask him what's going on. "My host was just down for 36 hours, so I signed up with you guys instead," he said. "But now they're back up and I think I may stay with them. Can you match their offer?"

I explain to him that we don't go down for 36 hours at a time and that our speed is faster than his current host. "Doesn't matter," he says. "I need that extra disk space."

Faced with the choice of either cancelling his account or upping his disk space, I compromised with him and upped his disk space to 1GB for his current price of $20/month.

Is this normal for customers? I thought it was sort of presumptuous, but I can't say I haven't done the same... I've gotten several hundred dollars out of other companies by threatening to cancel (Sprint PCS and Earthlink come to mind).

What would you have done? Would you have canned his account or acquiesced to his demand for extra disk space?

I'd let them go back to their old host who delivered them 36 hours of downtime. They're more deserving there. :D

Honesly, it depends upon costs and really how nice you feel like being at the moment. ;) If you know that you really don't lose much of anything at all by upping his count a little just go ahead and make him happy and maybe pull in extra customers in the future. Looks good for you when a customer feels like he is wanted and not just a number.

Personally, I probably would have done the exact same in that situation.

Originally posted by Aussie Bob
I'd let them go back to their old host who delivered them 36 hours of downtime. They're more deserving there. :D

Yeah, for sure... :rolleyes:

Apparently the old host was "moving their servers" and was down for that period of time. Insane.

I believe that most people who care about their customers would have done the same things, or something close to it. I know I would due to the fact that that single customer could possibly lead you into getting more future customers.

I know I would due to the fact that that single customer could possibly lead you into getting more future customers. They can also inform all of your current clients how to "get more out of you" and lead you down the path of "being down for 36hours" due to your attempt to 'please everyone with everything".

It's certainly a judgment call that needs to be made on a case by case basis remembering that just as much as you need to do all you can do to please a client, you also need to ensure you are not hurting yourself in doing so. No amount of disk space is going to be of use if the server becomes overloaded trying to service a bunch of PleasurePaks..

I don't play games with pricing. I don't want to be like a car dealer where everyone is paying something different and your price is based on your negotiating skills. It isn't fair to other customers.

I just don't feel comfortable with most customers having let's say 500MB space and one customer having 1.5GB at the same price. Yes, I gave the one customer a special deal. However, I feel like I am then cheating all the others.

Another example of how I stick to this policy. I rarely run specials....However, on those rare occasions, I then reduce all existing customers to the special price.

Another way of going about this is try to compromise with them about paying a little more than their usually paying, a promo-type thing. This could be good and bad. The customer may not go for it and leave or the customer could say, 'Ok, I can do that.'.

The only reason I would have come to a compromise with this guy is because he was referred by an existing client. I place a lot of value on word of mouth advertising. If it were not for that fact I probably would have sent him packing or charge him extra for the storage space.

Now once they are a customer it's a different story. I've doubled disc space for some clients without being asked and for no extra charges, just by noticing they were getting close to their limits.

Sounds like host hostage taking to me :laugh:

Everyone is out for what they can get, that's just a fact of life... but i always remember this common phrase: "give somebody an inch.... they'll take a mile". That statement rings quite true in the hosting world.

It sounds like he had been told to sign up, then ask for the free upgrade.... i would suggest your customer the refered him has probably mentioned you're a little soft when it comes to plea's?

There's a difference between good customer service, and being taken for a jolly good ride by a customer, i think your instance that you mention, slightly tips over to the jolly ride...

I had it happened to us now and then, and I always reiterate our value, but never going down to matching offers. Like Simon mentioned, you do it once, they expect twice. What if he comes tommorrow and says "I saw this host offering 2GB for $10...."

And this sounds ridiculous, but you would even have guys who would then go back to their current host and play off each host against each other (if both are willing to play the game) till the last one is left standing bloodied and wounded.

So to prevent that from even starting, our position on this is that we rather lose the deal if need to just so as not to create a precedence.

The exceptions are when the deal we need to match are not that much more, and we will then be willing to compromise. Those that's straight far off from our prices are told politely that "it's company policy not to undertake in price wars". You be surprised. Some still sign up in the end.

We'll do it once in a blue moon, and almost always for long term cutomers we have a healthy relationship with. Beyond that, we've set our pricing at what it is, as it meets our service requirements and business plan. If price is their only deciding factor there's a good chance they'll disappear shortly after anyway, when the next 'great deal' come along - regardless of your service and uptime.

There is plenty of others who will be happy with what you offer without needing to panhandle for the dregs.

Originally posted by akashik
There is plenty of others who will be happy with what you offer without needing to panhandle for the dregs.

That's true. I guess what threw me is that he had already signed up with us. If someone had just called us on the phone and said "Can you offer this?", I probably would have said no.

Having him already as a customer (albeit only for a few days), and having him be a referral from an existing customer, made it a bit of a different situation. I was worried that by turning him down I'd upset two customers of ours.

I should point out that I think Simon was right... it seems to me that our current customer told the guy we'd be a pushover. It kind of bugs me, but that was the second referral we'd received from that particular customer, and I expect him to refer more. The first referral he sent our way didn't ask for anything out of the ordinary. Being a pushover is not as bad in that instance, I suppose. :rolleyes:

When faced with these sorts of things, and if I am inclined to go along, I always try to avoid simply saying "yes" -- otherwise you will gain the (deserved) reputation as a pushover, and make the client wonder why s/he didn't ask for more. Make it a quid pro quo.

Try: "I'll tell you what. If you'll make a agreement to stick with us as long as our service is satisfactory and worth the price, we'll do _______________."

In most cases I only look for a "handshake" agreement (if it's something like this example). If I get the feeling I couldn't rely on an informal agreement, I'll usually stick to my guns and either politely tell the prospect to take it or leave it, or suggest s/he look elsewhere.

Bill

I hate clients who demand that we match deals of other hosts.

If I were you, i'd send him back where he came from.

I would be much nicer and more willing if he just mentioned something like, "Is it possible for you to offer me a better deal? This is what I want...."...

If it was phrased that way, I'd consider it and most probably work out a good deal for him, but since he DEMANDED it as such, the door it is for him.

That's my 2cents of course. :D Also, I don't like to get pushed around. :)

There's always room to play around a bit with the numbers - you've gained a happy customer and he'll probably tell the guy who referred him how cool you are. I don't see where this is a losing deal at all.

Of course if that customer *needed* the extra space, why didn't he/she sign up that kind of plan in the first place?

It just depends on if you're still comfortably profitable at $20 a month with that amount of space.

I'd let him go... God forbids he stays with you and you're down for 12 hours and he leaves you and than places a "can you math this" game with you again.

Originally posted by AffordableHost
There's always room to play around a bit with the numbers - you've gained a happy customer and he'll probably tell the guy who referred him how cool you are. I don't see where this is a losing deal at all.

Yeah, not only that. The person who referred him will also now be in position to get a better deal like his friend and it might lead to a chain reaction.

Long term existing customers sometimes get a few "freebies" out of us - one recently wanted a couple of extra databases, gave them free until renewal [3 months] under the agreement that they pay from next year - but the corporate line, is that we offer good value for money, and wont compromise that by price-matching - you get what you pay for - pay less, get less :D

Some customers are OTT when it comes to trying to "bargain" with you - those we stick firmly to the "this is our pricelist we dont devaite from it".

I agree with the fact that there has to be some "give" in the situation, but as coach said, if he needed the extra space, why didn't he ask for it before he signed up, or go to a bigger plan..

As i said in my first post, i think this is a case of "host hostage", he's been told that you have a weak spot when it comes to giving customers what they want, and he, and probably his friend, now have you seemingly in their back pocket.. which is never a good place to be from a host's point of view.

the client duped you :( . He should of signed up to a higher plan.

Greetings Erica:

"What would you have done? Would you have canned his account or acquiesced to his demand for extra disk space?"

We would have refunded his money (if within our 30 day money back guarantee), and said thank you to them for the opportunity to be of service.

If it matters, we have a client that calls us once a quarter, when they receive their invoice.

All of our staff knows him by voice by now <smile>.

After saying “hello,” he states that he received his invoice, “but times are tough in Brooklyn” (seriously --- I quote), and can we cut the invoice in half.

Each time we say no. Each time, he asks why not. And each time we try to educate him that why not.

One day he may leave us; but, that’s ok.

I would rather have a case that ran yesterday afternoon to this morning:

• H-Sphere control panel lets us know a customer had a problem adding a postgresql database.
• We locate and fix the problem; then we email the customer to try again.
• The customer emails this morning and states never mind, he cannot figure out the steps.
• We email back stating that if we can install it in “15-minutes,” the install is free, or to call us toll free to discuss the issue.
• He calls, we are all tied up.
• We call back within 15 minutes, and he is set.

Now that customer knows the value. He knows that if we see something, we fix it, and communicate it. We return phone calls, etc. He gets his bills quarter after quarter, year after year, and he pays. He doesn’t question value.

In any event, from reading your Web site, I believe you provide similar values to your customers.

If that’s true, then why sell yourself short?

Thank you.

===


Greetings Tina:

"There's always room to play around a bit with the numbers - you've gained a happy customer and he'll probably tell the guy who referred him how cool you are. I don't see where this is a losing deal at all."

Until the person who referred him asks for the same deal.

Until both persons tell all their friends don’t worry what’s published, Erica will negotiate.

Until Erica goes to sell her business and due diligence shows customers A, B, C, D, etc. getting the exact same services but paying the different prices. Or that there is no standard.

Then what?

Thank you.

I would only price match if the lower price still left a comfortable profit on the account. All server space does not cost the same let alone the cost of competant admin skills to prevent situations that cause 36 hours of downtime. Some hosts use single ide drives while other hosts use scsi raid drives. A host that uses a quality scsi system would cut into their profit if every new customer wanted them to match the space given by a host using ide drives.

36 hours of downtime and the guy still wants to stay with his old host because it's cheaper? Some poeple really need to be educated about shopping for a host.

Originally posted by Incognito
I don't play games with pricing. I don't want to be like a car dealer where everyone is paying something different and your price is based on your negotiating skills. It isn't fair to other customers.

I just don't feel comfortable with most customers having let's say 500MB space and one customer having 1.5GB at the same price. Yes, I gave the one customer a special deal. However, I feel like I am then cheating all the others.

Another example of how I stick to this policy. I rarely run specials....However, on those rare occasions, I then reduce all existing customers to the special price.
This is my philosophy also. The first business I owned was a health club. We charged $350/year for a membership. $500 for 2 years. Never had sales or specials. I felt sorry for a guy once and let him talk me into a lower price. $250 for the year.

Not long afterwards he was in the locker room telling people he only paid $250. Now I had a room full of guys pissed off because they paid $100 more. They all wanted a refund. But if I gave them a refund then it would get around to more people and it would snowball. Since I relied on refferal business I couldn't have a bunch of mad members.

From then on I decided that everyone pays the same. No deals.

But in your situation I may have made an exception to my rule Simpli-Erica. Harder for this information to get to other members. I guess there are exeptions to every rule.

diskspace does not matter, point is .. what the bandwidth he will use and server resources, normal hard drive now is 80gb, if user pay $22.5/mo without harming the server then i'll take him

Our servers all run SCSI now, and I assure you diskspace do matter.

We have our prices at a level that we feel are a good value. If it was an established customer that was considering leaving just for price, we may, in the name of good will, allow it.

For a new customer, not a chance.

Frankly even if it is an established customer I would not be inclined to, else they would think that in future, they can just threatened to leave and they would get their way.

And as some mentioned, what if other clients hear of it?

Established customers tend to be the ones that are more than happy to go on the upgrade path if they find they're running out of resources with their current plan. New customers can 'try you out' to see if they can squeeze something out of you, but in general they're fine once they know that you're not going to budge too often.

The Ad forums here are always a fine example of people getting 'asked' out of everything they own - and the web hosts who will happily give it all away and host people at a constant loss.

This is an interesting thread indeed, with a lot of varying opinions. :)

The part that really makes this tricky is the fact that the customer was a referral. And naturally... you want to keep your referral sources happy, even if you have to bend over backwards a little sometimes along the way.

One suggestion that I'd toss out is... if someone wants a special deal, ask for something in return for that so that you are not just "giving away" things for free. If you just "give away" things
without any consideration in return, it may make people think that they can get you to do anything in the future.

But... you can usually accomodate people's special requests and ask something reasonable in return and then everyone wins and
everyone is happy.

For instance, if I were in Erica's shoes, one angle might have been "Ok, Mr. Customer. Let me begin by saying that -normally- our answer would be no. But... since you referred by such-and-such AND if you agree to put a link/banner on your site [or something else] to us... I'll work out a special quote for you...
and lastly, this is to remain confidential."

This isn't to say that my example above is the perfect solution
but it is just an illustration of a kind of "give and take" angle
that could be taken with a client who has a special pricing or
service request.

As Deb said, "It's certainly a judgment call."

Personally, I would not match it. Someone signed. They know what they were getting. Simple.

If you do match, then soon you will have to match the $1/month 100GB of disk space and unlimited bandwidth costs.

Our clients know our value and why we do not mach prices.

Finally, there is MUCH more behind the number "X disks pace and X bandwidth."

Does this mean you do not change your pricing for any clients? No. We have a few clients that have a custom package or some friends that get a discount.

In this case, however, I would not match it.

I have an excell spread sheet that we use for calculating profits on disk space and bandwidth. Basically, it has the monthly prices that we spend vs the profits we need, and we calculate it from that and add the sales over head etc.

Now if you want to negotiate the price with them, I would not cut below the profit loss barrier (cost+needed profit to cover expenses). Doing that will lead to him telling a friend, and doing it for them, etc until you are finding yourself at the bank signing for a loan you cannot pay for.

Basically it depends on your companies needs. If someone under bids you, just say, keep us in mind. Sometimes it helps if you actually offer the customer that amount of disk space BUT in the negotiation, tell him that you will have to deduct some of his bandwidth to compensate for the lost profits. Sometimes that works, sometimes it dosn't. Also usualy quoting them a higher price and throwing some costless extras in will also help you tip the sell :)