Need you thoughts on a management decision

[Muddy]

Please feel free to offer your opinion.

I have a client who for 10 years has purchased exactly the same thing from me every month. We were never in a formal contract situation. They would fax a PO to me the third week of every month and by the end of the fourth week of the month we would deliver. It was 50000 pieces a month and it NEVER changed. I talked to them many times about the benefits of buying in bulk and thought I could create other synergies by doing so. They wanted no part of it and were happy to order every month and pay handsomely. It was a very profitable relationship for me.

Every month we would always print an extra few thousand while we were running and every so often we would be able to fill an order without going to press.

So now they have dropped this product and will never need them again. I've tried everything I can to persuade them otherwise but to no avail. That's not the point of my dilemma here.

I had a hole in my production schedule on December15th so i filled it with an order of these on spec thinking they would place an order and take a supply like they normally would. But that is not the case. They do not need anymore.

Because of the strength of our past relationship they have agreed to purchase any and all inventory I have in stock including all extras we produced on our own. They have agreed to pay the full amount for the 50000 and are asking about the price on the other 25000 extra inventory.

My question is, should I offer them a discount on the 25000 to be a good guy. As well, if I insult them they may refuse to take any of it. Or should I simply tell them the extrapolated per M price and send out the bill. I'm a nice guy but maybe I should say to hell with them if they are leaving there is no reason to cut them a deal. It amounts to about $400 if I discount the extras 25% which is what "feels" right. Not a lot of money but it is $400 to the bottom line in a very challenging time.

I have no one to bounce this off except you so please let me know what you think. Sorry if it got long winded

 

[mattbeals]

I'm not an owner, but here's what I think. If they are willing to pay their regular price for the last 50,000 run then I would sell the excess at cost. Get rid of it, keep them happy. I know money is tight for everyone but if you can recoup your costs and have everyone walk away happy I think that will go a long ways to keeping them as a client. It would for me when I was a print buyer.

 

[Craig]

Here are my thought's as an owner. You made the decision on your own to fill a void and run an order without an order from the customer. Even though this has been a regular job for the last 10 years, if I read this correctly you DID NOT have an actual order for the job. If I were you I would NOT bill them for for what you printed on your own, nor would I offer to give the job to them. I would let them know what happened and offer the inventory to them at cost no more, no less. If you have a relationship with them as I do with many of my customers, more than likely they'll take them from you.

I would rather walk away with a happy customer who may at sometime have another job like this and remember how well you took care of them and how fair and honest you were. GOOD LUCK!!!

 

[Muddy]

They have agreed to take them. In fact they volunteered and will likely still use/sell these until they are sold out. It's not like they are taking them off my hands and throwing them in the garbage.

After sleeping on this think I'll discount the whole thing at cost.

Thanks for your input

 

[Craig]

I agree, extend the olive branch and they will be more likely to do business in the future. I think you made a good choice!

 

[Morning Flight]

I think you made a good choice!

As a former owner, I think so, too, Muddy. Besides, you'll feel good in the morning.

Ethical Quandary: You're a lawyer and one of your clients overpaid you. Question: Do you, or do you not, tell your partner?

 

[jschrieber]

In my mind you absolutely did the right thing, Muddy; this decision has solidified your reputation with them as a trustworthy business partner. They not only may very well be back because of it, but could send new business your way as well.

It's impossible to put a price on good will.

j

 

[SlaveToTheMan]

Ethical Quandary: You're a lawyer and one of your clients overpaid you. Question: Do you, or do you not, tell your partner?

That's a trick question - all lawyers are overpaid!!