The supplier had just purchased the company that provided telephone service for buyer John’s company. The new owner’s representative called John to say that the old system would not work with the new supplier’s system and therefore the buyer must either agree to use their system or lose service. The representative claimed he had no information about what the old supplier charged and asked the buyer what he was paying per month for his company’s telephone service. The buyer checked with accounting and found that bills ranged between $1,200 and $1,500 per month.

The sales representative made some calculation and said he could provide extra services in addition to what was already provided at a monthly charge of $950 per month. He indicated that the old system would no longer be available. John and his management were delighted with the reduced monthly cost and the added benefits.

The telephone company then submitted a long multi-page contract that needed to be signed and returned within three days or the offer with the large discount and extras would no longer be available. At first, John didn’t have time to read the contract but realized that it must be done. The contract, written in hard to read small type, was for a term of five years and indicated that the quoted price did not include taxes, government fees, industry surcharges, and administrative fees.

John then went to the accounting department to look up the paid invoices. He found that the prices paid included itemized taxes, fees, surcharges, and administrative cost. He then used the prices for those extra charges and added them to the quoted price of $950. The adjusted quote then amounted to $1700 compared with an average of $1359 previously paid. In other words the new charges would be 25.1% higher than what was being paid. John’s solution was to look for alternatives rather than be pressured into signing an unfavorable agreement.