Adding Recession To The Sales Pitch.

ultimatetouch

I know traditionally you are not supposed to be negative. However recession is looming over all of our heads without saying a word. Is it possible that we add it to our sales pitch. Example: Mrs. Peterson we know that times are tough and money is tite, Ultimate Design & Builders has slashed there prices by 10% because we want to help benifit people in your neiborhood. We havent offered these price levels in 5 years. This is an oppurtunity to get the things done on your home and save big bucks.

I also like to mention the fact that we may get 4% interest rates thats a once in a life time oppurtunity.

I dont know if this is working yet because I have not went on to many estimate yet. I am also thinking about adding it to a promotion in the spring.

Does anybody have any ideas on incorporating this to a promotion? Or is this a bad idea?

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

Tom Struble

i always get scared when someone want to benefit me

1mancrew

If they already know that recession is looming....why speak of it and bring more negativity to the table? If your willing to drop 10%...maybe offer this as an incentive to close for a more upbeat reason.

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dan-o

IMO, we're better off selling the long term value of quality work at normal prices. Customers will continue to get lowball pricing for shoddy work. The way I see it dollars are tougher to come by so I will guarantee a better product, ROI on their investment if you will, than Mr. Tail Light Warranty.

I will be raising my prices this season. Up-Selling people on a premium paint job instead of the turn-n-burn of my competitors and offering an extended warranty on this premium work. It is cheaper for customers to buy high initially with a longer period between servicing.

Simply saying your prices have been lowered isn't enough, there's no way for the customer to quantify that. Maybe offer a 10% discount for signing on the spot or within a short, defined period of time. This lets them see exactly what the savings will be and spurs a decision.

People will be returning to the previous mentality of housing as a long term investment versus the 'flip' mentality. As a result, IMO, they will be open to the idea of lasting quality as worthy of a higher initial cost.

Carport King

Wow do not fall into that trap! You must stay postive no matter what.Only the contractors that are starving are discounting.

Go the other way with your product or services and raise your pricing. Yes we are off by close to 50% but we decide to raise prices and do less work.

It's worked for us so think before you leap into discount trap.

Look at bringing different products to market instead. Change up your message can make a world of difference.

Good Luck

Grumpy

Last year we had unprecidented increases in roofing materials. I don't diddle on the economy since some people are bomming in this supposed recession (which btw I refuse to beleive in).

"Mr Customer, I've been roofing 11 years now and usually we will have one or two price increases each year on materials. Last year we had at least 7 price increases. The price of most roofing materials doubled from December 2007 until December 2008, and the manufactuers are telling us to be prepared for more of the same. In other words it's not going to get anyc heaper if you wait."


If they bring up the economy and how bad it is and how much this or that costs, "Tell me about it... I bought a gallon of Milk yesterday, I remember when it was less than a buck a gallon." I build raport and remind them I'm in the same boat as they are. IN other words we've got to feed our families too.


The only questions I have is: Have you really slashed your prices? If so WHY? If not, don't lie.

Mr. Mike

No matter what it is always a good Idea to close on the first visit, you could use that story line with, now days everyone wants my best price and one way I figured out how to cut back on price is to sign you up today while I'm here...

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DetailHandyman

So true!

The other day, I had a customer ask "so what are your rates now that we're in this recession?"

I told him "same as they were before the recession".

People seem to think that because "times are tough" that you'll work for free.

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dan-o

Same here.
My response: Going up to cover the increasing costs of labor, insurance, materials and fuel. You can lock in this price by committing in the next 3 days.

Some people are facing wage reductions at work. Maybe they think we should be exposed to the same thing but that's why I work for myself.

Mr. Mike

Starving contractors are not the only ones using the discounts, discounts are a good thing the prospect hears discount and they feel better about the price. Your original price could be 25% higher than your normal price and then discount it 20% the customer is happy and you made an extra 5%.

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antnepi

I have resorted to offering discounts. I have lost 3 jobs in past 2 weeks to lower bids. The numbers that these other contractors were giving was unbelievable. When the people told me what another company bid I couldn't even compete with their low number. My response was that I pay insurance, taxes and have a license. All they cared about was the number.

DetailHandyman

I like the way of thinking there....

But then do we get into the problem of "training" the customers to expect discounts?

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dan-o

By positioning the discount as a motivator that favors you, ie. book within 3 days, you remain in control of the sale. They "win" on the discount, you get the close in a timely manner.

If you merely react to their requests to lower prices (sans motivator) you have become their bitch.

When people still persist on price, try and tailor the job to their budget by narrowing the scope of their project. Have them prioritize their desires and tally up a solution that they can afford.

We'll all need to become psychologists this season. Fortunately, my baseline is psycho so I'm halfway there!

Greg Di

That sounded good about six months ago. The problem that I am seeing locally is that there are so many desperate people out there, they are just giving away labor, driving the "going rate" drastically downhill.

So, let's say, last year all of us like-minded similarly qualified contractors were doing 5x7 bathrooms for $13k, now the price for the same job is $9k. Hypothetically. They still get the same job done, only for $4k less.

Disclaimer: Numbers are fictionalized.

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duckdown

Do you want to be in the middle of someone else's bad credit? Stay away from financing. Discounts sometimes sound like an opportunity to negotiate even steeper discounts.

dan-o

Obviously this discussion will vary widely based on location. Here in MA, along the coast, the economy is holding on.
As a painter I always have idiots doing charity jobs to compete against, regardless of the economy, so I guess I'm just used to it.

DetailHandyman

True, even in boom times there will be some nutbag undercutting you just to make the house payment.


Slightly OT:

I have to laugh at this whole "recession" we're in. So many people created there own problems by getting into these bad mortgages, and now I have to bail them out.

Four years ago, I bought my current home. At the time I got offered every kind of 5/1, 1/3, 5.1 dolby mortgage you could imagine. Nope, I'll take the 30yr fixed, thank you. I like to know exactly what I'll be paying.
I worked with a guy who was buying at the same time. He had previously declared bankruptcy when he couldn't sell his mobile home. He was bragging about how he got this great mortgage deal: half his mortgage was in a 3/1 ARM, the other half was in an interest only mortgage. I can only imagine the fun he must be having these days.

Why is it that when people make bad choices, I somehow end up footing the bill?

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IHI

EXACTLY, what's funny is last year with all the storm work initally hitting everybody was saying, "man, now's your time to rob these people and make a killing, everybody else will be doing that" I just laughed and said i've ben around too long to try and price gouge/take advantage of the situation since i plan to be here a long time after all this mess is cleaned up.

And now with the big recession eveybody is saying, "how much can you knock off that price? If you can get it down to here where the other guy is at, you can have the job." to which again, i have to laugh since i'll shut the doors before i start working for no gains other than to say i'm working...i can stay at home and go broke, trying to work for bare minimum to float through hoping the next job may pay off is retarded...what are you going to do when something comes up, tools break/get stolen, truck goes down and needs costly repair, your now taking away from personal money since business money is stagnet.

Keep your pricing the same, all this price reduction chit does is RUIN the market for all of us, which is precisely the reason people have a bad outlook on us professionals, they see prices all over the board, there's no consistency, hence no trust since to them, the end project is the end project so why are you twice as much as the last guy, or half the price of the next guy??

I've had a few customers try to bully me with this discount BS, and i just laugh and tell them we're too busy so if we dont get your job i'm not worried about it, so call the guy who is going to do it for next to nothing and hope nothing goes wrong since you will end up paying more than what i quoted you in the first place.

discounts and price reductions...FOCK DAT SHEEOT HOMIE. I can see a price freeze coming off last year since fuel and other items have gone down or stayed the same, but a reduction is this Hacktalk.com????

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HomeSealed

Something that seems to have been lost in this thread is that offering people a break and working for free aren't necessarily the same thing. I can't offer huge discounts because I already offer very competitive(if not aggressive) pricing. That is just our business model. That being said, I try to help people out where I can. A little bit of empathy can go a long way. The fact is that people are out of work and taking wage cuts all over the place. I am fortunate enough to be in the situation where I can help people out a little bit, and in the process, it keeps my guys working and our doors open. Win,win.

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DetailHandyman

Yeah, I agree on the empathy part. I'm all for helping out some old lady or disabled vet.

But as for the people who are out of work or took a wage cut...do they really need new windows or siding right now?
Are we supposed to give them a break because of their situation? I've got bills to pay as well.

Funny thing...when times are good, people blow the load on fancy furniture, expensive cars, ATVs, and every other "must have" thing. No priority on savings. Then they expect us to give them a break because times are tough. FTS.

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