Price Is Not Negotiable

Mike Finley

I don't really care if can walk on water, that doesn't have anything to do with the topic. Just because you say it's so doesn't make it so.

A weak salesman closes on price. Show me a salesman who closes on price and you're showing me a weak salesman, it's as simple as that. Weak salesman all have the exact same trait, they go right to price, each and every time.

Remodel Bud

maybe yours do. I never said close on price alone. It is a TOOL of negotiating. It could be the highest price. I could go to 1 million sales people that are the best in the business. Not one will agree with you. NOT one! You are really having trouble staying on the topic. good night! i refuse to engage any further with someone bent on being problematic.

Mike Finley

There are a dozen closing methods, closing on price is only one of them and the crutch of weak salesman world wide. Show me a weak salesman and on his business card it says "I close on price"

N E G O T I A T I N G - refers to price. Negotiating price means you are negotiating on price, it means you are closing on price. It means you are weak.

Take away the crutch of allowing a salesman to negotiate price and what what happens (it's always the same) -

Step 1 - They cry and throw tantrums. They come up with 20 excuses why the world will come to an end, everything from the competition is too strong to their product sucks and is over priced.

Step 2 - They go through a transition period exploring value, relationship building, features, benefits. Without the crutch of price to fall back on they are forced to explore, they are forced to go back to basics.

Step 3 - They learn to sell again and their gross profits magically go up. Customer satisfaction goes up too.

Feel free to put that in your next seminar.

Mike Finley

Before you respond I'll give you some quotes out of my book:

Why professional salespeople don't negotiate price:

#1 Weak salespeople sell based on price.

#2 Professional sales people don't.

#3 Prospects don't know what the right price is.

#4 Prospects want to make you flinch to test for the right price.

#5 Professional salespeople don't spend hours presenting their product, extolling the virtues only to summarize the entire value of their product down to $10 off the price.

WarnerConstInc.

My price is my price. Call me back 2 months later and want the work done? You get a higher price than before plus as an added bonus you get to take your turn at the end of the line!! I dont have time for cupon shoppers. Sounds like a dick move, but it always works for me.

Apex McGann

Hey Guys, Thanks for the opposing view points. Both have valuable points to consider. My deal here is that I did not realize my client was a salesmen at first. And I did not prequalify his budget for the overall project. And he asked me for my best price in writing. ( for those interested I post the quote in another section here at contractor talk) My labor rate is a bit low but as I'm getting this business going I still have some low spots in expense and I know that my rate will increase within a year as my expenses rise.

After reading your post and talking with a few folks on my end here I've decided my point of view on this subject. During the 'get to know ya' stage and 'get details of the job' stage, a little negotiation is good for the soul if both parties are playing the same game (and that is the key in negotiation in my view), not to give away the farm but more like two guys that exchange insults and become friendly there by. ( strange but true). But once the quote is on paper. The flexablity is not in price but in the job itself. add work/ delete work and the price changes there by.
This guy wants me to also do the mantle for the fireplace and I think his angle( not that it matters at this point) is he want the mantle include in the orginal price. My plan at this point is to write a note explaining that he asked for my best price and I gave him a quote that was 15.00 an hour under what my contemporaries charge for simular quality of work. and resubmit the orginal quote and a change order for the mantle at $500.00 labor only. ( I figure a good mechanic is worth $55.00 +/- )

Thanks again for all your replies. oh and if I may ask of the business consult guy that posted..... from a neotiation pov. what do you think he will come back with? just curious

Thanks Mark

Apex McGann

You know Mike I think that is what happen to me. he flinched me. I did not cave but rather was kinda shocked and told him i'd look at my numbers.(knowing that i gave a damn good price to boot.) your comment in the last post about replys to the price flinch are good and I will incorporate them. I've lost the momentum of the deal by withdrawing and this deal is probably lost. we will see.
I still feel that the preamble, before a quote is on paper, the negotiations are the norm. I feel that price should be consistent or increasing or seasonal as the case may be for each contractor and the state of the market he is in. It's the human version of two dogs sniff each others butt... "hey, what you been eatin? ask one dog. "Kibbles and bits. and what you been eatin?" says the other dog. etc.....

I'm book learned on it just not practiced at it..


thanks to all for the whack on the head and pointin' me in the right direction.

Mark

Remodel Bud

Jim Mora said it best, I'll quote him. "you think you know but you don't & you know what, you never will"

Remodel Bud

well there is life on earth after all.HA! thxs!

Double-A

Life is experience. Its what makes us who we are. Until we experience the particulars of doing business in one specific way, we're like a duck out of water. We hear its nice. It has a nice ring to it, and it seems like it would be more comfortable.

But, we're still waddling around chasing June bugs.

Bud, I respect your way of doing business, and I'm not against it. I just don't feel that for a smaller outfit without large volume that price should be the fall back negotiating position. There are too many other things we do that we can compromise on that will add value and improve the situation more to the client's liking than just backing off of our price until they say, "OK".

I don't disagree with negotiation, just negotiation over price. We put our price firmly where it needs to be in order for us to do the work, profit, pay our folks top dollar and meet all of our needs for overhead and future growth, including capital reserves for bad times. My point on price was simply this... Of those things listed, which are you willing to give up first?

For the small guy, every dollar has to count. And giving those dollars away before they are earned just doesn't make good business sense to me.

Sales is about personal connections and relationships to me, not dollars and cents. If it were strictly dollars, we could hire greeters like Walmart and open a store front with median wage retail people and tell them if they don't meet the sales quota, we're gonna start laying people off right after we cut out their health insurance because our stock holders are assholes and demand a higher return on their investment and no you can't have Saturday off to go see your boy play baseball.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

Remodel Bud

I appreciate the way you explained it, very nice and point well taken.

Double-A

<Puts on his moderator hat>

On a side note, we're all equals here and not one is above the other. We all participate under the same rules. Respect and civility are not optional.

Some of us bring more experience to the table than others, but our words will speak for themselves or fail do to so, as the case may be.

<back on topic>


Once you have lost your composure, you have failed to make the sale. Its as simple as that. Keep your perspective at all times. You don't lose money on a job you don't do. If walking away is the best option, do it. If your client truly wants the lowest price, you should have known that before you invested your time with them.

Qualify your clients and find the real reason they are buying. If you fail to do that, then you're at the mercy of their rules. And I think we can all agree on one thing;

Your client will never tell you the rules they are operating under unless you ask them. Most of the time, they don't have a clue. They are just following bad advice given them from other folks that don't know. Its sort of like learning about the birds and the bees from your six year old.

Sounds good to them, but that doesn't make it so.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

genecarp

right on,

__________________

Mike Finley

You sound like you in the good ole boy network.

Just one warning, be ready for the day when you walk in with your ow shucks, yuck, yuck, how ya doing attitude and you falsely assume you're standing in front of one of your good ole boys and then after a while things don't seem right... you're playing your game of honest, good natured negotiation and your customer is looking at a hay seed who he is very prepared to take advantage of in every way. Beware when you run into the shark smiling at you with those nice big pearly whites. That smile will turn into a huge bite of your hide.

All I'm saying is in your case, you sound young and starting out, beware when you go down that road of negotiation, you're playing with fire as soon as you run into somebody who knows more about it then you do. You first starting out are only a matter of time before somebody hands you a very hard lesson.

Wait till you run into one of these nightmare customers you see posted on here that know every trick in the book and will bend a nice, honest person over lickety split.

Have you seen the movie seen in that Densle Washington, Ethan Hawk movie I think it's called Training Day where Ethan Hawk is sitting at the table with the gang members and he innocently ends up handing over his gun? That's the same situation, suddenly what seemed like nothing turns into a major cluster f&ck when the innocent are playing with professionals.

You can go down the road of not knowing what to charge and letting the customer tell you what to, or you can go down the road of I'm the professional, this is what it costs to do it right.

wireless

My response to customers asking for a better deal is " I give you the best price right away. It would not be fair to price high expecting you to ask for discount because not everyone asks, it wouldn't be fair to charge them more. I price it so you don't have to ask."

Mike Finley

I'm not sure why you have gotten so upset over all this. Most of it is just in good fun.

But I would be curious if you would answer one thing honestly -

You said you've been in construction all your life, made millions running national companies, I'd like to know how many times have you squeezed a sub contractor on his price? How many times have you had a conversation with a sub about sharpening his pencil, help me out on this one... or anything to that effect as a result of you negotiating prices with a customer to get the job and asking your sub to take one for the team or more importantly take one in the shorts for the short comings of the salesperson being so weak that he finds it easier to find the money he couldn't get from the customer from the pocket of his loyal trade partner?

I can answer that question easily - ZERO.

How about yourself?

That's the dirty little secret of the 'negotiation' game and how it's played. Those who are so quick to look at all this as a game and price is just a tool are also exteremly quick to believe in the sh*t rolls down hill too theory and are just as quick to see how beneficial it is for everyone for the sub to cut his prices for the good of the team.

Carport King

Man this is a post! Here's my 2 cents. I am going to ringside of Remodel Buddy because he clearly understands how to sell.

See when you work for a large company and you have 20-30 or more sales staff you need to set up a sales and price struture that everyone can follow.

Now I fall back into the day when we used the par system. Some companies still may use it but most don't. Man those were the day's.

Our current company is set up with a price list they must follow. Now we do not lower pricing but we have closing tools for our sales staff to use if need be to get the sale closed.

We use gift cards, 3 day and 7 day vacation trips and a ton more things. We look at we can outsell our compitition within $1-2 thousand on a contract.

So what I think Remodel Buddy is saying is that it's not the price but the process of getting to the sale.

He may use a different way then me of getting the sale, but it's the closing tools we use to get there.

Now having said that let's look at today's ecomomy. The problem I see now is that most contractors are stuck on hey I need to lower my price to get the sales.

We see this big time here in Florida. Yes we needed to make big changes in our company to compete. But one thing that was never touched was the sales side of the company. We still sell just like before.

What we did do is look at the rest of our company and tear it apart to reduce our overhead until the numbers worked again. Yes by the time we got it all done we pissed away $800,000 doing it.

But now we are still making the same margins if not better and doing less work at times but our numbers are where they need to be to be profitable.

And our numbers are actually better now because we are watching them like a hawk.

I love this kind of market once in awhile because it cleans out the whiners and the bottom feeders and we come out of it stronger and more profitable.

So Remodel Buddy I'll meet you you in the center of the ring anytime because we are both winners.

DavidC

I just want to throw out that we don't have winners and losers here. Disagreeing viewpoints do not invalidate each other. I like to follow the posts of both camps for the knowledge to be gleaned and used as I see fit in my business.

FWIW, if I reduce my price to get the job I also reduce the services offered to fit the budget. My thinking is how often would an employee show up for work if he was told you must work for less today, but we've got some nice work coming down the road.

Like Mike said, set the stage early to thwart the price negotiation later and it is not a problem. If it truly is a price reduction that is needed to make that sale, then they are not our customer and I can live without that sale. It just seems to work out that those are the customers that will yank your chain and try to hang you with it. I've been choked enough.

But it's different strokes for different folks as they say. I don't like the one visit sales close as the primary either. We build relationships with our customers that last for years. I also don't want to make an error on the quote so it must go through our system of checks and balances before presentation. Once delivered it is our word and if we goofed we eat it. But that only helps us to command the price we get. You may not care for the way I handle these issues and thats OK.

Good Luck
Dave

__________________
www.CookContractingLLC.com

Remodel Bud

Generally speaking, negotiating doesn't have to be about price. I think the situation is if you are in the design/ build business vs. what I was in Home Improvements on a smaller scale, you are dealing with a couple appts and maybe a draftsman or architect. That is a bit different and is more so about relationships. I also, try very hard to build relationships,but if I am installing 10 windows in one day......i don't have as much of a relationship as a builder thats there two months. So ultimately, they are two different scenarios.....or are they really?


If a homeowner calls you and says thank you for the estimate on the addition, we are trying to decide between you and company ABC. We don't want to change the plans and want to do it as is, but company ABC is at 85,000 and you are 91,000. If you can do it for 85,000 and not change the plans, we'll choose you.

Now. Do you walk away? do you compare apples to apples? do you re-build the value and your company's quality.....? Probably, no don't walk away, but ry the other two. There are 100 hundred different scenarios so we won't cover them all.....or do you finally after the first few attempts that didn't succeed (lets just say)....do you negotiate?

10 leads and 2 sold. Someone would be a poor business man or person, not to follow up on why the other 8 were not sold. If a few percent was the difference, would it be worth it to negotiate to make a profit or not?
That few percent you negotiated could lead to the neighbors house or more referrals vs. the other company getting that TOO.
There isn't a correct answer, its all opinion. but you know where i stand. I heard a good saying" It's better to feed your family, than feed your ego"

I can appreciate not negotiating and standing your ground & there are customers that should be walked way from, no doubt. BUT, are you losing business from not negotiating.....would be my question. If you say no, you may want to honestly re-evaluate them & call back the 8 that were not sold. A higher closing percentage usually means higher profits

orson

Just stirring the pot a bit here because every construction business/management book I've read is contrary to that statement.

Closing ratio 4:5 markup=1.5 Average job size=21k gross profit per job=7k 4jobs x 7k=28k

Closing ratio 3:5 markup=1.7 Average job size = 23.8k gross profit per job=9.8k 3jobs x 9.8k= 29.4k

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