I’ve been bullied…

This blog is turing into the “What Gary does at work” blog, but honestly I have been doing very little except work recently.

Anyway, I was just on the receiving end of a masterclass demonstration of how big companies can steam roller small, desperate companies like mine. The story goes like this…

In December I received a phone call from a media technology company representing a large Finnish manufacturer of mobile communication devices, which will remain nameless. They were in the process of “connecting people” for a project that involved a component my company could asist with.

They asked for a quote regarding 500 pieces which would be the biggest order ever in the history of the company (we have only built 5 units in the last 3 years). They told us if we were too expensive they would walk away from the project straight away. We done our sums and decided that we could cut our prices to the bone as there was no sales or managing process so we cut our per unit price by 15 times from our stated monthly costs.

They got back, said this was ridiculous and wanted a price of 10 times less again. We started to cry and they offered to pay the upfront costs and give us a 3 year contract. We had nothing to lose so we said OK and agreed to a price which was 0.7% of our previous monthly costs per unit price (not actually as bad as it sounds as the amount of work is much less in the long term than the normal projects and of course we can continue producing our normal product on the side).

Anyway, the deal was that we would deliver 10 at first so we started work. A couple of weeks later it was reduced to 4, but we were assured that the big order was around the corner.  I worked for 6 weeks solid to deliver the first of these components, the other partners also did the same in order to get the first one ready for the big unveiling next week… Yesterday, the customer contacted the project manager and said he wanted to put the rest of the project on hold and would only take delivery of one unit to use at this big event next week…

We on the other hand have already bought the hardware to make the 4 devices and spent all the time doing the set-up work. Of course we could charge the customer for the hardware costs as we had a contract, but they know we won’t do this. It was on the monthly license on 500 that we would make the money and we have to hold out and hope they go through with that.

In total we lost 6 weeks of work and about £1500 in hardware costs. The customer got a bespoke one-off masterpiece for use at the big event which would have cost 10’s of thousands of pounds if it was being made as a one off and they paid next to nothing for it by simply waving a big carrot in front of all the small companies.

The funny thing is that each of the small companies would gladly go through the same process again, because you have to be in it to win it.

That’s how the rich stay rich, but I’ll keep it in mind next time I have to deal with a giant.