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Original poster

client wants to know our exact profit

61 replies

bizmum1 · 10/03/2015 08:39

At the moment I'm struggling with a client who wants an exact breakdown including costs of the project our company is doing for them.

We gave them a couple of pricing options - one simpler than the other - to complete the project so they had a choice of costings.

However, they now say they want to know exactly how much we pay our suppliers, where every penny goes including what we earn from doing the job.

We actually think it's not fair to expect us to say exactly what our profit is an expose it to the scrutiny of the client to pass judgement on whether that's right or not.

I understand them wanting a full itemisation of what is included in the price but to expect us to disclose every single cost is a bit much. What do you think?

OP posts:

Original poster

bizmum1 · 10/03/2015 11:59

Really appreciate your comments guys

OP posts:

fanofthevoid · 12/03/2015 13:06

This reply has been deleted

Message withdrawn at poster's request.

Original poster

bizmum1 · 12/03/2015 20:17

They are saying we are not being 'transparent' with our costs but we price in line with market rates and try to be competitive. We are in the film/TV production business.

What do you think I should say when he says we are not being 'transparent' - that seems to be their favourite word at the moment!

OP posts:

tribpot · 12/03/2015 20:24

I'm surprised you're still talking to them? I think I'd say "I'm sorry you feel we have not been sufficiently transparent. However, we regard this as proprietary and we do not disclose it". Then you walk away. They would clearly be a nightmare customer - you're already confident that your pricing is competitive, so what possible reason is there to reveal your profit margin? Apart from anything else, as others have mentioned above, 'what is a profit' is a subjective concept.

Original poster

bizmum1 · 12/03/2015 20:29

Great reply tribpot - thank you :)

OP posts:

tribpot · 12/03/2015 20:30

My other reply was "bog off"

Original poster

bizmum1 · 12/03/2015 20:31

LOL!

OP posts:

catzpyjamas · 12/03/2015 21:15

"Bog Off" would be my preferred answer!!

AKnickerfulOfMenace · 14/03/2015 00:05

Agree with trib pot and everyone else.

Heckler · 14/03/2015 00:14

What a rediculous request. I know that my company charges my time at over 800 per day. I don't get that money, but it covers the cost of office space, admin, all that crap.

They choose to buy my time or not. They aren't given a breakdown.

balletgirlmum · 14/03/2015 00:21

The only time we ever do this type of thing is when we are doing a project on day rates. Our standard mark up on materials is 20% so any materials needed the client is given a breakdown & 20% added.

We absolutely don't tell them the difference in our labour rates & actual rates of pay. We have a price we charge particular grades out at & that's it.

AlphaBravoHenryFoxtons · 14/03/2015 00:30

They are a client, not a shareholder.

Original poster

bizmum1 · 14/03/2015 10:33

I've actually had another email off the client saying they are only asking for a full breakdowon of costs (not profit) so they can accept or challange.

Isn't that pretty much the same thing or am I missing something?

Had some brilliant advice here - thanks everyone

OP posts:

senua · 14/03/2015 10:38

only asking for a full breakdowon of costs (not profit) so they can accept or challenge.

They can accept or bugger off decline. End of!

Someone said above: they sound like too much trouble. If they are like this before the project even starts ...

Give them an eff off price.

AKnickerfulOfMenace · 14/03/2015 10:42

Did you already send them trib pots suggestion?

AlternativeTentacles · 14/03/2015 10:43

I've actually had another email off the client saying they are only asking for a full breakdowon of costs (not profit) so they can accept or challange.

'I am really sorry, but the quote is the quote. You can either accept or challenge that. I cannot breakdown costs as the longer you dither, the higher my eventual costs get as I cannot guarantee that I can get the materials at the cost I quoted at.

If you would prefer, you can purchase the material/s and I will just charge you £x per hour for my labour, which is likely to be y hours for the duration of this project.'

CocktailQueen · 14/03/2015 10:44

Agree with the others - don't tell therm!

And TBH, if clients are this awkward to start with - THEY NEVER GET BETTER.

Walk away!

Original poster

bizmum1 · 14/03/2015 10:44

Thanks for quick reply senua :)

OP posts:

Original poster

bizmum1 · 14/03/2015 10:50

Thanks everyone - I need to get back to them by Tuesday as the boss is now on holiday and he has asked for a response when he gets back. I have composed an email which has been hugely helped by the advice on this thread. I haven't sent it yet as I want to take my time with the response.

In his business (selling cars) everything is based on hourly rates and he can't understand why TV commercial production can't be the same. We make adverts on a project basis and have never been asked to do this before.

I don't think he has ever run his own business (he's the general manager) so perhaps he has that staff mentality and thinks we are trying to hide things - I don't know...

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senua · 14/03/2015 11:07

You could also gently suggest that he is looking at the wrong end of the telescope.
Go on the offensive.
He wants a TV commercial to increase sales. He can either get a cheap/crap product which achieves nothing. Or he can get a good product which costs twice as much BUT brings in ten times the custom.
Which does he want?

Alibabsandthe40Musketeers · 14/03/2015 11:09

Can he buy one part of your service without another?

In my industry it is common to offer 2 or 3 'grades' of service - each one clearly stating what will be included. The client can then choose which to pay for.

But there would be no breaking down of whatever the basic package is - because those are parts that are necessary for the service to work at all.

Just tell him that the quote is the quote, it can't be picked apart because anything he tries to leave out will mean that you can't do the work at all.

Goodpresentideaplease · 14/03/2015 12:31

I wouldn't tell them either.

How desperate are you for the work? That would depend on how much you are willing to share.

I am an accountant with a fair bit of experience in tv production and clients in that area. Most of my clients do not give breakdowns when they quote.

It depends what you are quoting for, if a week of expertise such as lighting technician then I would provide detail of x days at y rate (your charge out rate rather than what you pay the worker) . If a whole post production project then that may be trickier as they won't necessarily appreciate costs for using the software and equipment etc.

AlternativeTentacles · 14/03/2015 12:34

In his business (selling cars) everything is based on hourly rates and he can't understand why TV commercial production can't be the same.

'Look. You sell cars. I make adverts. If you don't like the quote then feel free to use another agency. The quote is the quote.'

Original poster

bizmum1 · 14/03/2015 14:34

This is all great advice....it may be a case that we have to walk away because we are not prepared to give a full breakdown. The good thing is, I have learned a tremendous amount from this experience.

OP posts:

tribpot · 14/03/2015 14:38

Being prepared to walk away is important. It shows that you believe in the value of your service.

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