“Dad, I Want a Price Increase!”

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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