“Dad, I Want a Price Increase!”

April 26, 2010 1:27 PM | Categories: Procurement, Suppliers, Jason Magidson

Last year, my 15-year-old daughter asked if she could cut our lawn for pay. She was a tenacious negotiator, and we settled on $16 for the front and back, which takes about 40 minutes to cut. We worked out some key performance indicators (e.g., clean the grass clippings from the sidewalk afterward), some risk mitigation strategies (review the lawn beforehand for foreign objects that may have been left behind by your younger sisters), and a service level agreement (e.g., cut the lawn within 48 hours of request). We even held a couple of informal supplier reviews. I have to say, I was and am pretty happy with my "supplier."

When my "supplier" approached me this week to talk about a price change, I embraced the conversation. I, of course, assumed she was going to propose lowering the price in light of the tougher economy. To my "surprise," she asked for a $2 price increase (that's 12.5%!). I looked shocked, and explained how the economy is not so hot, that I had started a company 15 months earlier and that I was keeping a close eye on my third-party spend (okay, I didn't really use the phrase "third-party spend").

My daughter wasn't buying my arguments; she was standing firm at $18. That's when I mentioned the other suppliers-in-waiting. I told her how her 13-year old sister had been asking about cutting the lawn and how the boy next door was advertising his lawn cutting service. Then I made a proposal. I said, "You're familiar with the inexpensive online bidding website I just launched (Sourcing Factory). How about we hold an online bid and you can compete with your sister and our neighbor as a way to determine the market price for this service?" Her response was, "No, that's okay Dad, let's just keep it at last year's price." I agreed.

Do you think I should have run the online bid? Would doing so have made me a "mean father?" Do you have any funny stories of negotiating with your son or daughter?

- Jason Magidson

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Easy answer. You want to eat? Mow the #$&#%^! grass. Then fix my transmission.

Dammit, when I was a kid you never got paid for mowing your own lawn, you only got paid by the neighbors, and badly, at that. And the KPIs were ridiculous. Furthermore, we had to walk 10 miles to school, then churn the butter when we got home, then... sorry, wait a minute...

"HEY!!! GET OFF MY LAWN!!"

# Posted By Eric Strovink | 4/26/10 2:05 PM

A few months ago my wife told our 11 year old boy-girl twins that we were going to go out for a few hours without a babysitter, which would normally cost us about $15/hour. My daughter quickly suggested that she should be paid $5/hour since she would be watching over her younger brothers (9 and 8). Her brother figured he ought to get paid $5/hour as well, because they were the same age. My 9 year old got wind of this and figured he should get $3/hour. My 8 year old did'nt have anyone below him in the chain, so he did'nt request any payment (he should have thought of the dog). Bottom-line is that we are only saving $2/hour compared to before. But at least it's all intra-family spend.

# Posted By dan tiernan | 4/26/10 4:32 PM

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