Offering Discounts In A Slow Economy

 
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Old 10-19-2008, 03:20 PM   #1
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Offering Discounts In A Slow Economy


This thread was written and closed. I believe because the original poster pulled all their content.
How can this scenario be made viable for the small contractor.
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Old 10-19-2008, 03:38 PM   #2
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Re: Offering Discounts In A Slow Economy


Don't remember the original thread, but as for discounts, that works well for some things and not so well for others. A GC can't give 10% off without losing his net profit, at least I can't.
How about something else like professional cleaning at the end of the job?
New coffeemaker with a kitchen remodel? If you think this will produce results for you go for it, but most giveaways and discounts seem to be offered by the vinyl window guys, or the specialty sales people. A discount on remodeling in general seems like a gamble to me. Plus it makes it seem like the rest of the time your company is charging too much money. Just my 2 cents worth.

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Old 10-19-2008, 04:28 PM   #3
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Re: Offering Discounts In A Slow Economy


I've been toying with the idea of offering 25% discount for the first plan I draw for new builders and 10% off to HBA members to see if it will help get things moving with things being so slow.

I'll offer the same thing to CT members if anyone here needs plans drawn. I need something to do!!!!!


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Old 10-19-2008, 05:33 PM   #4
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Re: Offering Discounts In A Slow Economy


I think it's a great time to be offering discounts!

Let's see, you're already slow, so you give a 10% discount and you're doing less jobs per month and making less money at the ones you are doin! Sounds like a win / win to me!

What's even better when everybody else catches on and they start discounting too to stay competive! The next month it takes a 15% discount to get even less work, then your competition catches on again and the next month it takes a 20% discount! You will all be paying the customers soon for the priviledge of working!

I'd really hate to think of the alternative, where someone in business runs the numbers and realizes they are doing less work so that means they actually have to raise their prices in order to maintain the same profits. Imagine if that caught on? What a nightmare, that would be. Can you imagine actually making money? That would be crazy!
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Old 10-19-2008, 06:06 PM   #5
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Re: Offering Discounts In A Slow Economy


Deja-vu.... This was a bad one the first time around. I dont think it will be much better the second time around.

I am thinking of handing out a 10% Price Increase Cupon, That should work well, for me at least. I just dont grasp the concept of discounting my services, I have a lot of time invested inside my head. I got a crap ton of pricey tools, I keep your home cleaner when I am there than you do!!!

BAH HUMBUG!!!
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Old 10-19-2008, 06:25 PM   #6
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Re: Offering Discounts In A Slow Economy


A buddy of mine was telling me a few back that when he use to bid government work, no matter what your price was if you offered some discount you got the job...even if you were still the highest bidder, discount was the key word.

If the governement falls for it, why not the general public?
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Old 10-19-2008, 06:33 PM   #7
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Re: Offering Discounts In A Slow Economy


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Originally Posted by Chris Johnson View Post
<Snip>even if you were still the highest bidder, discount was the key word.

If the governement falls for it, why not the general public?
So I'll raise my prices by 15% and then offer a 10% discount!
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Old 10-19-2008, 06:40 PM   #8
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Re: Offering Discounts In A Slow Economy


I believe it is not a bad thing to offer something/discount. I use to offer a free sink with a kitchen remodel or a Kohler sink or toilet with a bathroom remodel.

I do think offering a percent of the sales price is a dangerous offer, if you aren't very conscious of your numbers or doing very high gross volume.

I will take a stretch and say 70% of contractors don't truly know their numbers. Which makes a % discount very risky, more so in this economy

I will go on record and agree with Mike that it may lead to a slippery slope. But I think if marketed right It can give you a good lead in for the sales pitch.
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Old 10-19-2008, 07:09 PM   #9
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Re: Offering Discounts In A Slow Economy


I think that most "companies" that offer a percentage discount have merely raised the sales price of their product/service to cover the discount. Just sounds like a shady sales gimic to me.

The only discount I can see viable is on products "from last year". Or stuff that's in your storage shed collecting dust.

But again, I'll stress this:

If you can put a dollar amount on the spending or wasteful cost of what they're using now, and then show how you can save the customer money, I bet they'd even be willing to pay more for your product/service than the competitor's 20% off stuff.
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Old 10-19-2008, 07:31 PM   #10
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Re: Offering Discounts In A Slow Economy


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Originally Posted by rbsremodeling View Post
I have believe it is not a bad thing to offer something/discount. I use to offer a free sink with a kitchen remodel or a Kohler sink or toilet with a bathroom remodel.

I do think offering a percent of the sales price is a dangerous offer, if you aren't very conscious of your numbers or doing very high gross volume.
There is something else that is being missed here I think.

There is an incentive to get someone to pick up the phone and call you and there is a plain all out piece of sh*t, weak ass salesman that says if I gave you 10% off would you sign today?

BIG, BIG difference.

Offer an incentive, attached to stipulations that make you money.

A free Kohler sink with the purchase of our upgraded line of cabinets.

A free screen door with the purchase of our best grade exterior door.

An free upgrade is also a very good way to do it.

Buy X of something that we normall don't sell or is an upsell and get something for it.



That's a very good incentive to get someone to call.

But after you are in the process if you've got to cut your prices to land the job that's a totally different animal all together. Cause all that is a straight discount and like said it's a slippery slope, especially if you are slow.
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Old 10-19-2008, 08:26 PM   #11
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Re: Offering Discounts In A Slow Economy


Quote:
Originally Posted by Mike Finley View Post
There is something else that is being missed here I think.

There is an incentive to get someone to pick up the phone and call you and there is a plain all out piece of sh*t, weak ass salesman that says if I gave you 10% off would you sign today?

BIG, BIG difference.

Offer an incentive, attached to stipulations that make you money.

A free Kohler sink with the purchase of our upgraded line of cabinets.

A free screen door with the purchase of our best grade exterior door.

An free upgrade is also a very good way to do it.

Buy X of something that we normall don't sell or is an upsell and get something for it.



That's a very good incentive to get someone to call.

But after you are in the process if you've got to cut your prices to land the job that's a totally different animal all together. Cause all that is a straight discount and like said it's a slippery slope, especially if you are slow.
agreed 100%

I think you should write a sales book and let me have 10% of the proceeds for giving you the idea
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Old 10-19-2008, 09:14 PM   #12
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Re: Offering Discounts In A Slow Economy


We started our first ever coupon campaign in September. 15% off any remodel job. Response has been good. It states on the coupon to present the coupon "after" you receive your quote. We targeted 20,000 homes in our city and sold two good jobs off of the adds so far.
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Old 10-19-2008, 10:34 PM   #13
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Re: Offering Discounts In A Slow Economy


Quote:
Originally Posted by Brock View Post
We started our first ever coupon campaign in September. 15% off any remodel job. Response has been good. It states on the coupon to present the coupon "after" you receive your quote. We targeted 20,000 homes in our city and sold two good jobs off of the adds so far.
any successful business that is focused on sales will offer incentives. It's proven to work and exists in all walks of life. A small remodeler may not understand how to use this tool or be effective at marketing, but any sales driven company will know......it is powerful.

Just remember. Do it professionally, legally, justify the incentive and don't rely on it over Value. You need value before any incentive will be well received.
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Old 10-21-2008, 05:16 PM   #14
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Re: Offering Discounts In A Slow Economy


I like the idea of having a hard number or product as an incentive. This way it is part of the cost of doing business...I think the customer feels safer with this format as well. They know what they are getting up front, there seems to be no smoke and mirrors. The fact that you are supplying a discounted item at a retail price such as a wholesale purchased sink helps it appear more as a marketing strategy rather then a show of desperation.
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Old 10-21-2008, 09:21 PM   #15
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Re: Offering Discounts In A Slow Economy


Welp,

Just signed a nice double bathroom job today. Part of every contract signing is a discussion with the customer of why did they end up selecting us.

Ruled out one contractor cause they didn't know ass from hole in the ground.

Ruled out 2nd one because he offered them a $1500 discount if they would sign right then an there. Customer said he found that to be BS, he wanted the guys best price from him when he presented the costs, customer said exactly - "If he could discount the job $1500 that means that 10 minutes ago when he gave me his price he must have added $1500 to the job in order to be able to discount it 10 minutes later."

We were awarded the jobs on being the best fit and the most knowledgeable and with appearing to be the best company for the job.

No discount given.

Now not all customers are this smart, but it sure is nice to find them once in awhile.

Win / win. We will do the jobs happy in the knowledge that we are making the proper profit and the customer will be happy because they have paid enough to be made happy by us.
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Old 10-22-2008, 04:54 AM   #16
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Re: Offering Discounts In A Slow Economy


Quote:
Originally Posted by Brock View Post
We started our first ever coupon campaign in September. 15% off any remodel job. Response has been good. It states on the coupon to present the coupon "after" you receive your quote. We targeted 20,000 homes in our city and sold two good jobs off of the adds so far.
Thats just insane!

If you sold a million worth of work this way you'd be giving up $150,000! That would be your companies profit. Will you be happy just working for a paycheck?! Will you get a paycheck?
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Old 10-22-2008, 12:16 PM   #17
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Re: Offering Discounts In A Slow Economy


I increased my markups. Smart business dictates when volume goes down markup goes up to achieve the same profit. We are doing less jobs but making twice as much profit per job than we were doing last year, therefore we are doing alot better financially this year.

Be the black sheep, and do the opposite of what everyone else is doing. There are guys out there pricing like they are going out of business, and that's because they are. I have seen quite a few competitors drop off of various directories, with new low priced competitors to take their place. Sure they are "busy" but are they making money?

What's the point in working for practice?


Do I offer discounts? Sure I run "sales" from time to time. I will sometimes offer $100 if the jobsite is a high traffic site and I can leave my signs up for 30 days. I am even have coupons on my website, but to be truthful very seldom am I ever taken up on these discounts coupons or offers. Another point that must be made, even in these trying economic times (if you pay attention to the media) very few people are asking me for discounts. Of the last 15 sales I have made not a single person has asked me for a discount.

Why? Because I built the value in my sale. Because I am actually offering more than most of my competitors. Because there are dozens of guys charging more and hundreds charging less, but very few actually doing a better job. Because I take the time to meet with the customer and explain all that in very minute detail if necessary. Because I know more technically than most of my competing salesmen. Because I treat my customers like people not like dollars. Because in most cases people respect me and begin to trust me after they have met me. I started the year with the same fear as everyone else, then I had a tragic death in my company (heart attack unrelated to any work activity). It was bad there for awhile, but when I RAISED my pricing, thigns started to click.

I discovered that the people who were hiring us wern't hiring us because of our price. I already knew that but forgot it because I was paying too much attention to the media Bull kaka that the sky is falling and we are in the midsts of the next great depression... No I realized the people were buying ME not buying my price. I decided that the people would hire ME if I added $500 to the price, and I was right, so I added another $500 to the price and I was still right... and you know what? Our volume didn't go down, not one bit. Our volume has been lower than it was all last year since the start of the year, but our volume has held steady all year even after I raised my prices.



I really believe when you play pricing games you'll get price shoppers. Have you tried raising your prices before you lower them?
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Old 10-22-2008, 12:58 PM   #18
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Re: Offering Discounts In A Slow Economy


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There are guys out there pricing like they are going out of business, and that's because they are.
That's a good one! I'm going to use that on my next estimate.
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Old 10-22-2008, 01:19 PM   #19
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Re: Offering Discounts In A Slow Economy


Well said Grumpy, and ya know, it's even better news coming from a guy that does high volume sales like you do.

For a while it seemed as though there might be a split between people that do lower volume and ones that do high volume.
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Old 10-22-2008, 01:56 PM   #20
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Re: Offering Discounts In A Slow Economy


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Well said Grumpy, and ya know, it's even better news coming from a guy that does high volume sales like you do.

For a while it seemed as though there might be a split between people that do lower volume and ones that do high volume.

The market your in and your companies presence, reputation probably makes a big factor as well as how you sell your services.

Some will equate lower volume to lower profit but in actuality you can profit a lot with lower volume if your reputation and sales techniques are solid.

I know guys with higher gross volume that don't make as much profit per job as my company does. I try to command top dollar and produce good work for it.

Depending on the sales environment you come from your salesmen technique will most likely revolve around that as well.

I am lucky to have been in both environments and try to take the both of both worlds and put them together

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