I run a manufacturing business servicing several industries - 1 of them being a massive industry in SA. Our company is only 5 years old and we employ under 10 people. We recently dipped our toes into a massive market and were blocked by a player within that industry who insisted that in order to get into the industry we would need to go via them. I will call this company - COMPANY A.
COMPANY A expressed great interest in promoting our selling our products via an existing client that they have. I will call this client ... CLIENT A.
COMPANY A explained to us that they have a written contract with CLIENT A who takes 15% of their turnover and that if we want to do business we will be forced to go through COMPANY A who will take 20% plus they will add on CLIENT A's 15%.
In this same meeting I expressed concerns about the mark ups as we were obviously worried that in giving COMPANY A a volume related price we would not get the volume because of all the mark ups but we still went ahead with the deal and started to get work in.
COMPANY A further stated that whether it was ourselves or themselves that brought the business in ALL quotes AND invoices would be done by COMPANY A.
The procedure is thus that if we get an enquiry in we send our quote to COMPANY A who then puts on all the mark ups and who sends the quote to the prospective client.
This last week we received an enquiry for a R50,000 job. My member of staff in error sent the quote to the prospective client (I will call them PROSPECTIVE CLIENT) and was unable to recall the email. We decided to call the prospective client to ask that they please ignore the email and we followed up by sending the quote to COMPANY A who then in turn put their mark up and emailed the quote to this prospective client.
The quote jumped from our R50,000 to R73,000 and PROSPECTIVE CLIENT took both quotes to her MD! He knows COMPANY A well as he is also one of their clients and in fact he is their biggest client. He quite rightly so blew his lid at all the mark ups. COMPANY A phoned and discussed this with me and I in turn phoned PROSPECTIVE CLIENT MD and explained to him that we had offered COMPANY A a volume related price and that our normal selling price would have been much more (this is true).
PROSPECTIVE CLIENT MD told me that he knows COMPANY A for over 20 years and that there is no ways we will ever get the volume from them and insinuated that we have had the wool pulled over our eyes because according to him we are not obliged to go through COMPANY A to service CLIENT A and are allowed to deal direct with anyone and that the contract that COMPANY A has with CLIENT A does not give them the right to force us to go via them!
Naturally I was astonished but more importantly it seems that we have lost the R50,000 deal. PROSPECTIVE CLIENT has said he would like to meet me face to face when he is next in Cape Town and when I offered to go ahead with the job at the base price of R50,000 he did not reply.
COMPANY A could lose their contract with CLIENT A and lose all their business with PROSPECTIVE CLIENT if I tell PROSPECTIVE CLIENT the truth. I would love to get PROSPECTIVE CLIENT'S work as they are the biggest player in the industry but it's a tricky situation because CLIENT A is also a massive player in the industry.
Hopefully the above is not too complicated to understand ..... any suggestions or advice would be much appreciated.
Do I phone PROSPECTIVE CLIENT on Monday and tell him the truth and thereby lose COMPANY A with no guarantee of gaining PROSPECTIVE CLIENT?
Do I just keep quiet and await PROSPECTIVE CLIENTS visit to CT and hope for the best and in the interim possibly have lost credibility with both PROSPECTIVE CLIENT and COMPANY A?
Do I have any other options I could consider?
Would really love to hear your advice ... thanks for listening everyone!