If people tried to pay for other services like they try to pay for programming
dump.com
dump.com
Historically, the consumer experience is actually the exception, not b2b. Up until fairly recently it was standard practice to haggle for everything you buy. It's only the rise of the middle class and of huge companies that sell goods/services to millions that brought about this new idea of fixed prices that aren't open to negotiation.
This is why always asking for a discount is worth it.
This is where price discrimination comes in, and it is staggeringly effective: coupons, sales, discounts, etc etc. The great thing about fixed prices is that there are so many to choose from!
They almost certainly get more money.
They are selling the budget chickens to the budget customers at a profit. They are getting the same chickens at a larger profit to other people.
Think of it this way: a rich man is willing to pay up to $10.00 for the chicken breast that his family needs for dinner, but his blue-collar cousin can only afford $6.00 at the most. Had the grocery store only created one line with the price of $8.00, their revenue from these two consumers would be only the rich man's sale, 8 dollars. If, on the other hand, the store had two lines, one for $5 and one for $10, they can make 15 dollars from these two shoppers!
Hope that clears it up.
Even where I live (Melbourne, Australia) a very non bargaining place, some restaurant districts have bargaining cultures. If you play your cards right, you can get wine and dessert thrown in if you order the steak, site by the window before the dinner rush (makes the restaurant look full).
My point is that bargaining norms aren't necessarily evolved from necessity, it's often just cultural quirks. This video is poking fun at a particularly quirky subculture.
I am a bit more shifty as I normally have the target place chosen before I even leave home and will try to make sure the maitre d' seeing me chatting to next door so I can play him off against them.
It is all good natured and they expect it.
A near lifelong citizen of Fitzroy and Brunswick, I've noticed that locals have shifted heavily away from Lygon St - for me, I refuse to eat there simply because even after you've had a satisfying dinner, you can't walk down the street without being accosted by every spruiker you come across. Having to walk a couple of hundred meters continually chanting "no thanks, we just ate, we just ate" takes the shine from a good dinner. I'd rather pay for dessert and wine than run the spruiker gauntlet...
spruiker:
(Australian) One who promotes his own cause; one who toots their own horn.
(figurative) A person standing outside a place of business trying to persuade patrons to enter, or vigourously trying to persuade customers to purchase a their wares (ie. a fruiterer calling out the price of bananas)
then there's the gauntlet of death down the other end. we generally walk the back streets to avoid the spruikers
Edit: few things:
* Most important of all - don't be a dick. Be friendly, honest and don't waste people's time
* If you can, hold of your purchase until you get the deal you're looking for. When I got my macbook, I when to a number of places and in the end got free applecare and a free case.
* If you're buying white/brown goods (except computers), a simple "What price can you do on that?" will almost always see a 10% discount, sometimes way more.
* Some stock is in constant demand, and you'll almost never get a discount. Black mens trousers, for example.
* If something on offer, the person selling it want's to get rid of it, and will most likely negotiate. Best example is food at the end of the day. Walking past a stand discounting the remaining donuts for $6/box, but you've only got $4? Make an offer anyway.
er... think I'l stop before this looks like a post on Lifehacker or something :)
What are "white/brown goods"?
Huh. I've always heard those referred to (on the few rare occasions) as black goods. Maybe it's generational.
Kind of old fashion but based on the typical color of these items (mostly from a couple of decades or more ago: washing machines and fridges are in many colors and A/V stuff is almost always black and/or silver)
According to Wikipedia, it seems to be mostly a UK idiom.
> * Some stock is in constant demand, and you'll almost never get a discount. Black mens trousers, for example.
The flipside is, if you're a guy and you're willing to wear light blue, pink, purple, and yellow, you can get some seriously great buys. You can get very high quality clothes in those colors for dirt cheap sometimes, which is why around half of my wardrobe is bright.
It takes a little aesthetic knowledge so you don't look ridiculous, but everyone should probably learn a little basic aesthetics anyways - it's one of those areas that a tiny bit of knowledge pays huge dividends.
Very true, but how does one go about gaining this knowledge?
Smashing Magazine (which doubles as good for web design).
Study the color wheel, read analyses of ways to use it.
Fashion websites.
Go to lots of museums.
Go to art galleries.
Flip through 2-3 fashion magazines per month at the bookstore.
Read book(s) on how to dress for different functions.
Go to high end stores and try things on.
Talk to artists, designers, architects, painters, etc. about why things look the way they look.
Take some art class, either crafting/doing-based, or art history.
Go with some sort of visual artist to a museum, and ask their thoughts about paintings.
Get a girlfriend/boyfriend/significant other who is an artist.
Any of those would help. The more you layer on, probably the faster you learn.
Also, study fashion/clothing advertisements. Scrutinize and analyze why they chose what they chose... many fashion ads will be regarded as high art in the distant future, because immense amounts of preparation, lighting, setting, and skill goes into making them. Almost anything that's in one is in it for a reason. Look at it and ask, "Why did they choose this? What are they trying to say/portray? Why this background/environment with that sort of clothing?" It's not instant gratification on the last one, but soon you start seeing the patterns. It's kind of beautifully awesome when you do.
Do you have any specific resources or tips on how this relates to clothing? I've done this, and tried to argue my case in color choices based on this, but generally I've been laughed at when I bring this up. (probably because other factors also come into play and I'm about as blind as a mole when it comes to choosing colors).
We're talking about art here more than science, so there's no breakthrough right answer like in mathematics. My experience is that I'm more savvy and I start to notice the patterns, but my skill level isn't high enough that I can lecture on the topic intelligently. It's like, after doing all this stuff I have intuitions when shopping for clothing and dressing, and I tend to get complimented on what I wear, which didn't happen before I studied.
I hate vague answers like that - I wish I could give you something more concrete. It's not the "oh you just have to figure it out" whimsical idealism, it's that I lack the skill to give a more cohesive and concrete explanation... apologies for that. If you know anyone who is an excellent photographer or painter, and is also good at explaining things analytical, they might be able to provide more answers.
One tenet of color theory.
(Experience is a harsh teacher.)
There are potential downsides (if it was his last one he might have missed the chance to sell it for full price, it might be seen as setting a precedent) but generally salesmen understand these and figure them into their reasoning.
Yea, let's lay low. We don't want gnosis thinking we're another gawker site or something.
Got it late one evening early 2009 or late 2008. It's one of the first gen unibody Al macbooks. Conversation was something like
<gentle discussion on price />
"Hang on, let me go check with the boss"
[few minutes later] "We can't drop the price, but if you're willing to buy it right now we can throw in free Applecare and a free case"
"Deal"
The worst customer experience... Once a guy called me and asked for a quote. I told I prefer hourly rate * hours worked and explained why it's better for him. He called me crazy and insisted on fixed quote, although he wasn't even sure what he exactly wants. I did fast calculation in my mind and gave him a rough quote. I was bargaining at that time and quote was really very low. Then client did a fast calculation on his end and was lecturing me for ~ 45 minutes that I'm ridiculously expensive and I won't have any clients unless I lower my prices 3x and how dare I charge average monthly salary (for probably 2+ months work...) if I never went to university and so on..
Fast forward 1.5 years - I charge 4x more than in those days and I'm fully booked...
if your not told your expensive on a monthly basis your too cheap
If I wasn't clear, I was saying: if you're fully booked and charging 4x what you were once told is too much, are you considering increasing your rate? In general, I would say you should but I was interesting in hearing this person's thoughts.
Also, there's no such thing as a single standard rate. Varies by skill set, by person, by project, by time/situation, by non-monetary factors (the strategic benefits or opportunity costs of doing a deal/project, etc.) So when someone asks me what's my rate, it signals to me that they are, at least somewhat, a newbie and/or unsophisticated (even if "experienced"). Instead, you tell me what you (think you) want. I tell you whether (I think) I can provide that. We go back and forth. Then somebody (hopefully the other guy) throws out a figure. The other accepts or counter-proposes a different figure/terms. Back and forth. Then shake/sign on something. Move on. Repeat.
I'm fine with the former, you get what you pay for, the latter however, really makes me mad.
Get past the point where negotiations usually happen and the deal appears done and your counterpart is committed, then bargain. We're used to it happening as consumers. There we call it bait & switch.
By the way, is AOL still doing that? I used to get a couple every year, but I haven't received one in several years now.
I find that the term "commoditized" refers to goods or services that one, are all identical and b) are really, really cheap, like most commodities in the late 90s.
Most pro level consulting teams work open ended time and materials contracts. There's very good reasons for this, but this definitely gets abused to deliver a project that was never expected to come in on budget. It also exposes the client to the effects of bad management or other incompetence without a lot of redress.
Imagine if you were buying a hamburger and they told you that because they burned the first one you're going to have to pay double.
The hard bargaining can go both ways too. I've included what I considered ridiculous rates in a first draft of a proposal (to give me room to negotiate) only to have them often accepted without a blink. In fact, I'm quite sure not having a standard rate card has been responsible for hundreds of thousands of extra money over the years.
It sounds to me like the creator of the video probably does fixed price bidding, at least in part. In my experience that's never a good idea or worth doing - even if you can manage it OK (extremely unlikely) you end up alienating the customer by having to be so anal about scope creep.
If you have a contract where's the after the fact negotiation come from anyway? Are they really willing to say then sue me?
I whole heartily agree with your summation. Fixed price just sets it off on the wrong foot in the first place. What I generally do, is provide my best estimate of what the project will take. I also agree if the project runs past my estimate by 15% that I reduce my rate to my bottom dollar rate. This way I am not handing it out for free, but they understand that I am not trying to run up the clock as well. The other thing we agree on is that any feature creep pushes the estimate back by the size of the feature. I have found that this works well, gives the customer a comfort level, and though it is my rock bottom rate, I am not eating costs left and right for a project that goes bloody. It cost me opportunity costs but not hard out of pocket costs which are far harder to swallow.
I mean if the doctor overruns putting your new liver in, it is by a few hours at most. The economies of scale are way out of whack to make those kind of comparisons. What other professional, in generally do is a reproduces group of processes.
Our profession is unique in the fact that while there are similarities in what we do, each new project is wholly different (if you are doing custom apps). Now we do have stuff like Wordpress that make the simple stuff cookie cutter but for the most part people are not looking for that when they hire a custom software developer. They are looking for a new and novel product. The problem is that it is one of the only professions where product development is purchased from small and unsophisticated buyers.
We really are a unique profession in which our product is still crafted and not manufactured. The problem is as a society we have gotten used to everything being manufactured so the expectation is that building software is akin to manufacturing where the reality is it is more akin to an art and just like art, their are few really talented artist to go around.
Understanding, this goes a long way to helping customers see your value without alienating them by becoming defensive. I read the horror stories about bad clients all the time and sometimes wonder if it is a lack of educating the customer. I have had maybe 2 or 3 really bad customers in my 20 years. I just don't see how luck could produce those odds. I don't think I have a secret sauce and I am sure I have turned a good deal away that would have been bad customers, I just take time to understand their needs and to explain how software development works. Usually, if someone does not feel like they are getting screwed they are pretty agreeable.
If someone comes to me and says I have 50k to build X and X looks like 40K to me, I will tell them I am not comfortable taking the gig, based on the fact if it overruns they don't have the reserve to see it through and that I do not want to leave a customer without a product at the end of 50k. They then either tell me what they can burn to, which is usually far more than needed or we both agree that they are putting their capital at risk. In which case, I try to work with them to trim features to get it to a 25k product. Double the estimate overruns are rare if one is even remotely decent at estimation.
Speaking as someone who went to get a new filling in June, went through getting a root canal on another tooth, and finally will end up going under a GA to get some more serious work done in a month or two, I can assure you that doctors (well, dentists) do <i>not</i> charge on a fixed-symptom basis.
Even if you need to return to a doctor only to get a new copy of a script you have already had, most doctors will charge you the consult time.
Given that you appear to suggest there is no art to medicine, it sounds like you have no exposure to the medical world. Our profession isn't as unique as you make it out to be.
Interestingly, under the Medicare reimbursement system, that's pretty much exactly how they are paid (if the patient is a Medicare patient).
Ain't so. Doctors get paid for their time, Medicare just has the government pay for it instead of the patient.
Also, dentists in particular are poorly covered by medicare here. I remember as a student going to a dentist that was affiliated with my uni and having the receptionist laugh when I pulled out my medicare card...
In the US, Medicare is only for old people, and it's uncommon for them to attend university. Also, "uni" isn't a usual American colloquialism. So it appears that michael_dorfman is talking about US Medicare, and you're probably talking about Australian Medicare.
Most of us are fortunate to not have medical anomalies that require anything other than routing medical attention in which case prices are pretty cut and dry. My point was when a doctor recommends a path of treatment they usually have a comfort level with that treatment and it's effectiveness.
In your case the filling, the root canal and the serious work where three separate projects. In the development world, you would get the requirements for the filling and the root canal would feature creep in as the filling was being done. That was my point, was that doctors (for the most part) have pretty fixed problem sets like root canal where developers have different problem sets for each new project.
The reality is, I am fine with my middle rate, I expect negotiation so my mind is in the middle, if they don't negotiate, then the rest is gravy but when I go into a project, my rate reflects room to negotiate. I don't fear giving out my rock bottom rate as a tool that they can use against me based on the fact that they are receiving pressure for my time from other clientele. Having the ability to walk away from the table is the most powerful tool in ones arsenal when it comes to sitting at the negotiation table.
I believe in fairness, and I believe in making my clients comfortable with the value I provide for their dollar. I love negotiating, because it allows me to show my clients the value they are getting for their money and it allows me to make them feel like they have walked away with a deal. Both are psychologically important factors to creating happy customers.
In my experience... The client orders a hamburger. You give them a hamburger. The client really wanted a hotdog and expects you to eat the cost of the hamburger.
Not a big deal in the real world, except in this example hamburgers cost tens of thousands of dollars.
Seriously. Even though I know it's all mocked up, every time the video cut to the restaurant my pulse started to rise.
By ordering off the menu, you agree to the price on it. Similarly, when you sign an agreement to pay someone for work done, one would hope you'll pay that person when the work is done. Sadly, reality teaches us that this is not always the case.
(+) this == "You saw the price and consumed the product, now it's time to pay." "But I don't have any money." "Oh fuck. I'm fucked, not you, even though you're the asshole."
Anyway, as far as I can tell resturants are all about experience, and maybe forcing the customer to prove they can pay would degrade the experience to the point where the resturant makes more money by just accepting the occasional dine & dash.
Also in a real resturant if a customer was sitting there baldly refusing to pay, you could probably just call the police (I dont know, I've worked in resturants and have never even heard of this happening).
Regarding the housing comparison, the nature of the credit, the goods exchanged and the fact that maturities are so much shorter in restaurants (1:8)[1], allows (requires) restaurants to engage in riskier business practices. Mortgage lending risks are obviously much more complicated, but you are correct to point out that risk is an inherent part of issuing credit.
[1] Assumes 3 hours credit issued to the average customer, with average inventory borrowed for 30 days.
25% retainer, equal installments of 25% at respective milestones. End of story.
The video should play the first 10 minutes and then display a dialog box prompting for a credit card in order to update to "Premium" (which would just make the dialog box go away).
The hairdresser should color her hair purple, but once she paid the bill, it would magically turn blond at 3 a.m. via Microcolor Automatic Update.
The chef should electronically disable the steak-embedded Exlax dispenser once the bill was paid in full.
oops, just in case... </sarcasm>
Cutting edge meat, still some bugs being ironed out but totally worth it if you avoid that whole beef mess. A weird disc with wires attaching it to a projector that that you can put in the dvd player and it plays the projector reels, sort of. When the hair's half cut, a grey hair is discovered. Now it's on track to be finished by Christmas.
Against my better judgement I recently completed some work without a written contract. It was exactly like the restaurant scene: they'd received the services and used them but started questioning the bill (after it became overdue).
I still find it strange that people view other people as a commodity like oil or pork bellies yet they expect ridiculous returns, akin to a barrel of oil spontaneously duplicating and selling itself for $300
You appear to be correct.
Granted, my particular circumstance was a little bit loose on the details of the contract, but it was within my rights to do so, and I got paid in full (plus the extra half up front) for the work I did.
Software, by and large, does not make people happy or do what they want nearly as reliably as steak does, and so if I were them I would be much more finicky about paying people to make it for me than I am about paying people to make me steak.
And especially, software made to order has even lower mean and even higher variance than most of the software that people use. And you don't know what you're getting until you get it, at which point the incompetent software vendor is demanding some ridiculously exorbitant sum for something it turned out you didn't want anyway.
You personally may not suck at programming, but the majority of programmers do, and so people are very justifiably unwilling to cough up the dough programmers demand.
If that's where you start, sure, you can arrive at a lot of conclusions and be none the wiser. I have been to restaurants where the steak was far less reliable than you suppose.
Actually, that's not true - I avoid restaurants like that by figuring out that the one I do go to respects me as a client as I do respect it as the place that makes my tummy full. And there we arrive at the point of the video: The vendors are the ones who bring respect and quality to the table, the problem is that the clients do in no way mirror that respect.
If a client is willing to "just get somebody to do something for as little cash as possible", that's what they will get. Fortunately, people who care about the things they want to have done check first, treat their business partners well and live in a happy place where real things are negotiated for real prices that are then paid like adults.
The success of a development project, or software implementation depends just as much on involvement from the customer as it does for the developer or provider.
In the enterprise, this means setting up a project consisting of stakeholders from which you can gather information, get integration assistance, etc. In the single-project bespoke software or web development arena, it's even more important that the customer is able to provide good feedback, offer and direct according to their vision, etc.
Back to the steak analogy, what would be the remediation for the customer yelling "More salt! More salt!" and then refusing to pay when the final product is too salty?
In other words, if you're good at programming, why are you in the custom software business instead of something more scalable?
If you didn't see it, I can connect you to some companies. Work for them for some months and you see that 90% of the coders there (contractors or employers) effectively put themself in slavery.
Although not all software developers are like this, we all have to suffer from the consequences of these acts of low selfevaluation.
Really neat video though!