My friend George is a geologist who spent the first 11 years of his career in South America. He speaks fluent Spanish. When his children were grown, George and his wife, Joanne, moved from the suburbs and bought a co-op apartment in New York City. A few months after moving in, the ceiling plaster in their bathroom started falling down, so George rang up the building superintendent and asked him to come up and look at the damage.
When the super arrived, he inspected the ceiling and offered to get a friend to take a look at it and give George a bid. A few days later, the super and his buddy arrived, and George showed them into the bathroom.
After looking at the ceiling, the super turned to his friend and, in Spanish, asked what it will cost to fix the ceiling. His buddy pondered the assignment and in Spanish explains it will cost $125. Then the super turns to George and this time, in English, tells George it will cost $175. George looks at him, smiles, points to the super's friend and in Spanish replies: "I like his price better."
They all had a good laugh, and three days later the ceiling was fixed for the agreed upon $125. From then on, George and the super communicated in Spanish.
Last November, I was having problems with my asthma, so the doctor ordered chest X-rays, and the bill was $814. It seemed a bit steep. In February, I started getting dunning notices, and was asked to call the billing department at the radiology lab. The only problem was that every time I called, they told me the computer was down, and I should call again. I gave up.
Then, on June 23, there was another pay-up-buster notice, so this time, I decide to call the insurance company. Turns out the insurance company paid the $371.62 bill on Dec. 7, 1998. But wait a minute-the bill was for $814. Does that mean I owe the balance of more than $400? Nope, I owe nothing.
Evidently, if I didn't have insurance, I'd pay the $814, but the price to the insurance company is only $371.12. I like their price better. The whole system seems nutso to me.
So how does pricing work in your business? The supplier gives you a price-the $814 price-but before you can discuss it, you sneeze. The price gets dropped to $700 and change.
You look the sales rep in the eye and explain that this time you need the supplier's best price. The sales rep asks you to hold on while he calls his boss from your office He explains the situation to the boss and gets permission to drop the price to $613.27. At that price, the supplier is barely breaking even.
You explain you have to think it over; the salesperson asks what it is you have to think over. You explain that you have to think about the price. Now the price is reduced $475; you frown. The sales rep asks for permission to call his boss again, this time you get the final price, $371.12. You say to yourself, "I like this price." When it comes to pricing, the folks in procurement have all the fun.
When Frank Burge isn't carping about prices, he can be reached at fburge@ cmp.com