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0768 Negotiating Price

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Complete Transcript
Welcome to English as a Second Language Podcast number 768: Negotiating Price.

This is English as a Second Language Podcast episode 768. I’m your host, Dr. Jeff McQuillan, coming to you from the Center for Educational Development in beautiful Los Angeles in the State of California in the country of the United States – but you know that already!

You also know our website is eslpod.com. Go there, become a member, download a Learning Guide, and support this podcast.

This episode is a dialogue between Justin and Rachel about trying to get the best price for something that you’re going to buy. Let’s get started.

[start of dialogue]

Justin: Hello.

Rachel: Hi, Justin. It’s Rachel from McQ Corp.

Justin: Oh hi, Rachel. Did you get our bid for the job?

Rachel: Yes, we did. We like your proposal, but we still need to come to terms on the price.

Justin: We’ve already given you our rock-bottom price because we want to get this job, but we always try to be flexible.

Rachel: Good. Could you do better on what you’ve quoted us for labor? The price seemed a little high.

Justin: We might be able to trim a little off of that. How about if we discount that by 10 percent?

Rachel: That’s an attractive offer, but we were hoping for 20 percent.

Justin: You’re driving a hard bargain. We have certain fixed costs, you know.

Rachel: I do and that’s why I’m only asking about labor costs. Can you meet me halfway at 15 percent?

Justin: I think that might be doable, if that’s the only stumbling block to us getting the job.

Rachel: I can’t make any promises, but I’ll do my best.

Justin: That’s all I can ask. I’ll send you over a revised bid.

Rachel: Great. I hope to have good news for you next week.

[end of dialogue]

We begin our phone conversation with Justin saying, “Hello.” Rachel says, “Hi, Justin. It’s Rachel from McQ Corp.” “Oh hi, Rachel,” Justin says, “Did you get our bid for the job?” To understand “bid” (bid) you have to think of a company or an individual person who wants to get something done, or perhaps wants to purchase something – buy something. A company may ask other companies, “How much will you charge me?” How much will it cost me to do this, to build a new building or to paint my offices or whatever it happens to be? These different companies will then give you a proposal that includes a price: “Well, we will charge you 25 dollars,” or, “25,000 dollars,” whatever it is. That proposal, with a price, is called a “bid.” So, a “bid” is something that I give to another company, telling them how much I will charge them to do whatever they want to have done. “Bid” actually has a few other meanings in English, as well, and those can be found – where else? – in the Learning Guide.

Rachel said, “Yes, we did (receive your bid).” She says, “We like your proposal (what you are suggesting or proposing to do), but we still need to come to terms on the price.” “To come to terms” (terms) means to reach an agreement or an understanding, to agree on something. Justin says, “We’ve already given you our rock-bottom price.” The expression “rock-bottom” means as low as possible; usually we’re talking about a price for something. What Justin is saying here is that the price that they gave Rachel and McQ Corp. is the lowest possible price they can give them; they can’t give them any more discount, it’s the rock-bottom price. Sometimes people use “rock-bottom” as a noun, especially with the verb “hit.” “I’ve hit rock-bottom” means I’ve gone as low as I can go, especially if you are having difficulties or you have some sort of problem. Usually it’s a negative thing to hit rock-bottom. Justin says, “We’ve already given you our rock-bottom price because we want to get this job (meaning we want you hire us), but we always try to be flexible.” “To be flexible” (flexible) means to be willing to change, to be willing to do something different; in this case, perhaps, to be willing to lower the price.

Rachel says, “Good. Could you do better on what you’ve quoted us for labor?” “To do better on” means to improve in some way. What Rachel is asking for is a lower price on what Justin has quoted them for labor. “To quote” means to give a price, usually in writing. A “quote” is similar to a “bid.” Here it’s used as a verb to mean to give someone a price – a definite price written down, here’s how much I’m going to charge you. “Labor” is the amount of money you pay people to work. So if you are painting your house, labor would be the amount of money you have to pay the painters, the people who actually put the paint on your house. The other part of the cost would be the supplies, the things they actually use; in this case, the cans of paint that they have to buy. Rachel says, “The price (the price for labor) seemed a little high.” Rachel’s company thought it was too high.

Justin says, “We might be able to trim a little off of that.” “To trim” (trim) means to reduce the amount of something or make something a little bit smaller; to trim your hair would be to cut a little bit of your hair off of your head. “Trim” has a few other meanings, which can be found, once again, in our Learning Guide. Justin says, “We might be able to trim a little off of that (to lower the price). How about (what do you think) if we discount that by 10 percent?” “To discount,” as a verb, means to lower or reduce the price of something.

Rachel says, “That’s an attractive offer, but we were hoping for 20 percent.” “Attractive” here means appealing, something that makes you want to accept it, something that sounds or looks good to you. “Attractive,” when used to describe a person, would mean someone who’s very good looking: a handsome man, a beautiful woman. Rachel says that the offer – the proposal that Justin gave of a 10 percent discount is attractive, it’s nice, but her company was hoping for 20 percent, a 20 percent discount on the price of labor.

Justin says, “You’re driving a hard bargain.” The expression “to drive a hard bargain” (bargain) means to be a difficult, we might say a “tough” negotiator. A “negotiator” is someone who negotiates a price. “To negotiate” means to go back and forth with someone to get the best price you possibly can – the lowest price you possibly can, and that’s what Rachel is doing; she’s negotiating the price. She’s saying, “Well, we’d like it a little lower,” and Justin is saying, “Well, we can’t go that low. How about this?” and they go back and forth, each one of them saying something, and eventually they will agree on a price. But if you make it very difficult for the other person to agree with you, if you ask for a lot of things or want a very low price, we might say that you drive a hard bargain; you are very difficult to negotiate with.

Justin says, “We have certain fixed costs, you know.” A “fixed cost” is a kind of expense that you have to pay for, no matter how much business you have. So if you have an office in a building, you have to pay rent every month. It doesn’t matter how much business you are doing – how much you are selling, the person who owns the building wants his or her money for the rent. So that’s what we would call a “fixed cost.” It doesn’t go up or down, typically, depending upon the amount of things or services that you sell.

Rachel says, “I do (meaning I understand you have certain fixed costs) and that’s why I’m only asking about labor costs.” Then she says, “Can you meet me halfway at 15 percent?” When you say, “can you meet me halfway” (halfway – one word), you mean can we compromise, can we divide it in half. Can we – another expression – split the difference? You want 25 percent, I want 15 percent; we agree on 20 percent, it’s halfway between 15 and 25. So, the expression is “Can you meet me halfway?”

Justin says, “I think that might be doable.” “Doable” means you are able to do it, it’s possible. He says it “might be doable, if that’s the only stumbling block to us getting the job.” A “stumbling (stumbling) block (block)” is something that makes it difficult but not impossible for you to get what you want, to reach your goal. In this case, Justin wants to get the contract from Rachel’s company. He wants to be able to sell his services to her company. A “stumbling block” would be something that gets in the way, some difficulty. He’s saying that if the labor cost is the only stumbling block he might be able to compromise – to meet her halfway – by reducing the labor cost by 15 percent.

Rachel says, “I can’t make any promises, but I’ll do my best.” Justin is asking her if there’s going to be anything else she wants to ask for, and she’s saying that she can’t make any promises. She can’t say yes definitely, but she’ll do her best; she’ll try to make sure that this is the only thing she asks for. Justin says, “That’s all I can ask,” meaning that’s all I want you to do, to do your best. He says, “I’ll send you over (I’ll send you) a revised bid.” “Revised” means corrected, updated, changed. Rachel says, “Great. I hope to have good news for you next week,” meaning I hope I will be able to tell you that you – your company – got the job; we are going to hire you next week.

Now let’s listen to the dialogue, this time at a normal speed.

[start of dialogue]

Justin: Hello.

Rachel: Hi, Justin. It’s Rachel from McQ Corp.

Justin: Oh hi, Rachel. Did you get our bid for the job?

Rachel: Yes, we did. We like your proposal, but we still need to come to terms on the price.

Justin: We’ve already given you our rock-bottom price because we want to get this job, but we always try to be flexible.

Rachel: Good. Could you do better on what you’ve quoted us for labor? The price seemed a little high.

Justin: We might be able to trim a little off of that. How about if we discount that by 10 percent?

Rachel: That’s an attractive offer, but we were hoping for 20 percent.

Justin: You’re driving a hard bargain. We have certain fixed costs, you know.

Rachel: I do and that’s why I’m only asking about labor costs. Can you meet me halfway at 15 percent?

Justin: I think that might be doable, if that’s the only stumbling block to us getting the job.

Rachel: I can’t make any promises, but I’ll do my best.

Justin: That’s all I can ask. I’ll send you over a revised bid.

Rachel: Great. I hope to have good news for you next week.

[end of dialogue]

We think acquiring or picking up English is very doable, especially if you listen to the scripts by our wonderful scriptwriter, Dr. Lucy Tse.

From Los Angeles, California, I’m Jeff McQuillan. Thank you for listening. Come back and listen to us again here on ESL Podcast.

English as a Second Language Podcast is written and produced by Dr. Lucy Tse, hosted by Dr. Jeff McQuillan, copyright 2012 by the Center for Educational Development.

Glossary
bid – a written proposal indicating how much one will charge in order to complete a specific project or type of work; a statement of the amount of money one is willing to pay to buy something in an auction

* The state is requesting bids from construction companies to fix the fallen bridge.

to come to terms – to reach an agreement or understanding; to agree on something

* It took days of negotiations, but they finally came to terms and agreed on a selling price.

rock-bottom – as low as possible; the smallest possible amount of something, especially when talking about money

* The computer store is selling laptop computers at rock-bottom prices for one day only.

flexible – willing and able to adapt and change as needed; not rigid or strict

* Why can’t the IRS be more flexible about collecting taxes?

to do better on – to improve in some way; to be superior in some area or action; to make something better

* If Li doesn’t start doing better on the exams, he won’t pass the course.

to quote – to present a price in writing, especially as part of a proposal

* Why did the company quote $750 for licensing? Don’t they already have all the licenses they need?

labor – work performed by people, not machines

* When building a new home, what costs more, labor or materials?

to trim – to reduce the amount of something; to make something smaller

* Stefan is trimming calories by not putting cream in his coffee.

to discount – to reduce the price of something, especially for a short period of time

* A lot of stores discount summer merchandise at the beginning of fall.

attractive – pretty; something that is nice to look at or receive; something that captures one’s attention and seems pleasant or good

* The cable company is making an attractive offer to try to get new customers.

to drive a hard bargain – to be a tough negotiator; to not come to an agreement quickly because one insists on receiving certain benefits

* Car salespeople are trained to drive a hard bargain with customers.

fixed cost – a type of expense that must be paid not matter what, regardless of what activities or sales take place

* No matter how many units we sell, we still have to pay our fixed costs like rent, electricity bills, and salaries.

to meet (someone) halfway – to compromise and evenly split the difference between two points in a negotiation

* She wanted to sell it for $400, but I said I could only afford $200. Eventually I met her halfway at $300.

doable – able to be done; possible; acceptable

* The boss wants us to finish this work by Friday, but I don’t think it’s doable.

stumbling block – an obstacle; something that makes it difficult, but not impossible, to reach one’s goal; something that presents a challenge and slows one down

* Harold never paid a speeding ticket from more than three years ago, and that proved to be a stumbling block when he had to renew his driver’s license.

revised – updated; corrected; referring to a new version of something

* How long will it take you to make those changes and send the revised report?

Comprehension Questions
1. Why isn’t Rachel ready to accept Justin’s bid?
a) Because it’s a little too expensive.
b) Because Justin’s firm doesn’t have enough experience.
c) Because they can’t agree on the timeline.

2. What is Justin going to send to Rachel?
a) He’s going to send a different proposal.
b) He’s going to send a similar proposal with a new budget.
c) He’s going to send a revised budget.

Answers at bottom.

What Else Does It Mean?
bid

The word “bid,” in this podcast, means a written proposal indicating how much one will charge in order to complete a specific project or type of work: “The state received 20 bids for the construction project.” A “bid” can also be a statement of the amount of money one is willing to pay to buy something in an auction: “The opening bid was $75.” A “bid” can also be an attempt to have or to do something: “The army general risked his life while making a bid for power by trying to kill the current leader.” Finally, when playing cards, a “bid” is a statement of how many points one expects to win during the next part of the game: “If your opening bid isn’t realistic, you won’t be able to win the game.”

to trim

In this podcast, the verb “to trim” means to reduce the amount of something or to make something smaller: “We can try to trim expenses by reducing our marketing budget and buying smaller ads in the newspaper.” The verb “to trim” also means to cut a small part off the edge of something with a pair of scissors: “You’ll need really sharp scissors to trim the edge off of this thick fabric.” Or, “How often do you get your hair trimmed?” The phrase “to trim the tree” means to decorate a Christmas tree by putting ornaments or other decorations on it: “They spent the evening listening to Christmas songs and trimming the tree with handmade ornaments.” Finally, the phrase “to trim down” means to lose weight: “Quentin trimmed down by exercising more and eating less.”

Culture Note
How the Government Awards Contracts

The “federal” (related to the national government) government often hires “private” (not part of the government) companies to complete work. Federal “agencies” (parts of government; departments) must “comply with” (follow) many rules and regulations in giving “contracts” (legal agreements covering what work will be performed, by whom, when, and for how much money) to these companies or individuals.

Agencies can choose to “solicit” (request bids) in two ways: “sealed bidding” or “competitive negotiation.” With “sealed bidding,” all bidders “submit” (send in) “sealed” (closed; not seen by others) bids and the bid for the least amount of money is chosen to receive the contract. Using sealed bidding, each company or person who bids does not know what the other “competitors” (people trying to win) are bidding and so must give the government a bid that is high enough to complete the work, but low enough to beat the other bidders. With “competitive negotiation,” the agencies can consider other factors, such as the company’s reputation and timeframe, in addition to price.

Detailed requests for proposals or bids are published with a specific “deadline” (the date and time by which something must be submitted). Once a bidder has been selected for the project, the agency and the bidder must negotiate and “fully execute” (sign by both parties) the legal contract “governing” (overseeing; controlling) the work. The contract usually includes “milestones” (specific parts of the work that must be submitted by certain dates) and “milestone payments,” so that, for example, the bidder might receive 20% of the total payment when they complete the first 20% of the work.

Comprehension Answers
1 - a

2 - b