Price Is Not Negotiable

Remodel Bud

INTERESTING here are my results from 2007.

2831 leads
1444 sold
51% closing %

1444 sold
788 1st call close
55% ratio 1st call close%

718 closed avg 13% above selling price structure from 1st call close
656 closed on second visit 2% above selling structure.

The sooner the sale was closed the more profitable, but I do a high volume

Mike Finley

I used to be a consultant too. So I can say :

Do you know what the job description of a consultant is?

Somebody who saves a client almost enough money to pay his fee.

rbsremodeling

I think that there are two totally different sales games here. High volume and average remodeler.

There is a big difference in how the game/rules are decided at those levels.

Bud and Glen are at much bigger levels than most of here hence they agree.

Smaller guys like myself and most here have to guard the profit margins alot more closely on each job. Versus making the monthly, quarterly, yearly margins.

I have played both leagues and they are vastly different set of rules.

__________________

Remodel Bud

totally agree and I made mention to that. Thanks for your input. I can appreciate a intelligent polite conversation.

SethHoldren

David Sandler would say successful sales strategies work regardless of the industry. But he also allowed room for different processes.

I think you have to allow for different sales processes; determined by a number of different scenarios.

For example, selling replacement windows requires a different strategy than selling construction-only services for a remodel. Also, selling a full-service "design build" remodel project requires a whole new sales sequence. As does selling new construction, commercial, industrial, heavy highway, and beyond.

Each situation requires a different scenario. You are NOT going to "one call close" a public bid job. Conversely, you don't need to build as deep a relationship to sell a $15,000 window job.

Also, if you already have an established relationship, or if you got in through a referral, your system will be different.

To argue whether negotiation has a place "across the board" is futile. Negotiating works well in some situations, and not as well in others. It's as simple as that.

An owner-builder-salesman "one man show" can end up opening a can of rotten worms if he doesn't hold firm on his already fair price. And it's possible for guys like this to close at a very high rate on well qualified prospects without negotiating.

However, when you're dealing with a product that has more easily definable, set-in-stone margins, you can negotiate.

No small remodeling company is selling 1400 jobs in a year. We're talking about guys who start maybe 2 projects a month. Sometimes if a guy like this opens the door for negotiation, the client will demand his very last dime. In a situation like that, it makes sense to hold firm in the beginning to set the precedent.

In other situations where you know your margins, and have a team of pro salesmen, you can negotiate.

So, some guys should negotiate, and some shouldn't. You have find the best sales tools to use for your specific situation.

__________________
Website Critiques

The Construction Marketing Blog

Remodel Bud

Mike, you can halt the personal attacks. It doesn't fit you well.

An example, besides all the pro bono work i do in consulting, i worked for three companies this year, all remodelers. Their volume ranged from 1 million to 14 million. Each was losing money last year, and two are profitable now and the other is close. They saved their business. Ask them if it was worth it.
and IF you reply, do it intelligently not in a manner asking for a nasty reply. I hope you run your business more professionally. I am sure you do....

Remodel Bud

ZERO. I ran it honestly, fairly and had great employees and subs. We were loyal to each other and i would do anything for them. i was active in the business and did many things for them and them I. We had annual parties at the end of the year, I was best man in one of the subs wedding. You have a STEROTYPE in your mind and it's not me. THATS why i get so upset. SHOULD i typecast you? NOW, move on and stay on the subject.
If the salesman was incorrect in his project cost, I ATE it and trained him better. I had good people and that didn't happen often...it's called MANAGEMENT SKILLS BROTHER!

Mike Finley

Lighten up lead boy. I could careless how much money you think you make. Make blanket statements that negotiation is the only way to go and you'll be challenged. I challenged you and 5 others did the same. Seth and RBS have restated exactly what I have already said.

Lighten up, this is the Internet, it isn't a job inteview or a sales presentation for your services.

Remodel Bud

childish ABSOLUTELY childish.

rbsremodeling

i sell remodeling services and what I consider my other business Windows,shingles siding and handyman services.

My remodeling jobs are fixed Gross profit and set markup

My other services have room for negotiation.

Remodeling services are very detailed bids based on historic labor rates and exact material cost a 30k bath is a 30k bath.

The other stuff is handle on a gross dollar amount and sliding mark up, A salesman needs 40k a month to make a 4k commission as a average

Buts sometimes he needs 40k or 60k and make that 4k on that month. It depends on how the leads are coming and on the customers. He must make a judgement call at every sale and decide what must be done to close the deal to make his monthly commission

__________________

homework

Gave an estimate once to replace some windows, customer asked after he seen the price if that was the best I can do? I replied "If you want them done right, thats the price." He called me back later and I got the job. After the job was done and he gave me final payment, he told me that he was very happy with the work and wanted some other work done as well. Then he mentioned that he had recieved two other estimate on the windows and they were both lower then mine. When I asked why he chose me he said the others actually started higher then mine and when he did not sign right then, they began to lower thier prices over and over if he would sign and give a deposit on the spot. They lowered as much as 35%. This made him wonder if they can do that low why did they start so
high. He liked that I gave him a price,no pressure to sign right there and would not negociate.

wireless

That is exactly what I tell my customers when they ask for a better price. You don't want me pricing so that you have to negotiate, there are plenty of people who don't ask for a discount, which means they would end up paying more then they should be.

However, repeat customers who I know will try to bargain I will tack on a percent to knock off so they feel like they got a deal.

rbsremodeling

Let me ask a question for the forum.

When you sit down and work up an estimate for a job lets say a Bathroom remodel you come up with 30k as the cost do you

1. add additional cost for punchlist work
2. is there additional cost included in the price for unforseen work?
3. do you round your numbers up?
4. Do you add a few bucks for what you think is a PITA. pain in the ass customer?

__________________

DavidC

1. We label it warranty work, track it and make annual adjustments to our OH to cover it.

2. There is a clause that triggers a change order for unforseen, usually at increased cost but not always.

3. On the last total we drop the change.

4. Yes.

Good Luck
Dave

__________________
www.CookContractingLLC.com

Double-A

1. Additional for punch list? No. The job is not done until its done. Punch out is just part of the job. We do limit to three lists and two walks through.

2. Yes. Unforeseen is unforeseen and we generate a change. Doesn't matter how much money is involved, we generate a change on anything that is not in the scope of work. If we have to take care of it or most of it in the course of our work (like a bad sink arm in the wall that we have opened to add support for a wall hung lav, for instance) then we won't charge. If however it impedes or is not in our normal course of work, we charge.

3. No. Like DaveC, we drop the change on the last figure we total up.

4. I recommend this, but don't do it. The reason is this; if we decide to take on the project for the client, we're committed to that client and to their quirks. If we feel they are too quirky to work with in the first place, we don't' take on the job.

Qualify your client on all aspects of THEIR role in the job and you won't have a problem with dingy clients. Do your job so you can do your job.

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

Stone Mountain

In the past 3 years, I've had fewer and fewer people try to bargain. It's odd, because this year I raised all my prices about 15%. (I got tired of not making enough, and competing with everyone.)
Most of my customers accept my price and don't even ask. Of those who do try to bargain, most are half hearted attempts to get $2-300 off. Once in a while I get a rediculous offer, such as an $8000 quote ;"can I do it for 5500?"
Or, "I got a quote from such and such. We'd really prefer you Mr. Steinberg, so can you match his price"? "Why would you prefer me, Mr. customer? Well We don't trust the other guy" Well, Duh, you want me, pay my price.

Yesterday I walked away from a big deck. The guy wanted a penalty clause of $100 a day if I didn't finish by a certain date, AND he wanted 10% off. I explained that if he found someone to accept his proposal, to take it.

I don't think this year we've given away a cumulative total of $1000.00
My bottom line looks good for once.

__________________
Residential Deck Specialist: Vist our Website
www.fenceanddeck.ca

CornerstoneGC

Yup, I can see where I've gone astray . I do get those "squeeze me dry" clients once in a while, and I always faltered and caved in. Now that I think about it, I haven't increased my remodeling prices much in about a decade. I read lately in a Remodeling mag that the average cost for a 5x7 bathroom (basic stuff, white tile, white tub, etc) is about $10K. I'm assuming those costs would include labor only for all tile, replacing tub, vanity, toilet, drywall, durock, fixtures, plumbing, etc at about $5K in labor only with client providing all fixtures, toilet, etc etc and you providing the durock, drywall, setting materials, etc. The additional would be materials. It seems fair to me, but lately it seems clients have ideas of installing high end fixtures, marble, etc for the same price. I'm running into clients that even want high-end baths done for low-level prices for only one reason.....estimates from people advertising ridiculous prices that are here illegally or hire illegal workers, have no insurance or advertising costs, workers comp, etc.
When I work from references, I never have this problem. They want me, know my work and pay what I ask because they know I'm reasonably priced and always do a great job.
Hmm...I think it's time to raise my prices, not lowering them. As mentioned with the $300/day deal, that $300 no longer covers what it used to back in the days...

ContractorQ

Remodel Buddy I am glad your approach works. I would continue to work in that proven framework as well. I think what is being stated is that if all the client values is your price then it is not much of a relationship and all of the referrals will be given to you as the "low price leader". We give fair proposals and will continue to do so. It has taken a while but we have built a solid reputation of being fair and competent. I like that and will continue to run with it. What I will not do is drop my price to compete with all of the unlicensed, illegal and uninsured contractors that plague the state of California (do something about it you dumbass Arnold).

Jason Whipple

Exactly!

Now imagine a Contractor that can do that, do the design, and do the build!

Mike,

I think you right. After showing all those savings, you don't dick around with discounts or coupons.

Some of the posters here need high turn over because they are quick, less complicated jobs. It requires repetition, not craftsmanship.

__________________
Jason E Whipple, General Manager
Historic House Restoration, Cincinnati, Ohio
Facebook | Twitter

Tinstaafl

Wow. I drop in to see what the regulars have to say about a subject we all worry about, and find myself in a blinding cloud of sweat, blood and snot! I'm sorry to say it, but my regard for some of the seemingly more authoritative members on this subject has slipped a bit.

IMO, the Ultimate Salesman, regardless of his scale or particular clientele, has one characteristic that carries over into just about all of his daily dealings, whether personal or professional. That characteristic is that he does not get into pissing contests. If he does, all of his credibility and professionalism go right out the window.

Ok, grump over. My input: I have a very small operation, and I like it that way (as long as I can pay the bills). When I work up a bid, I do so with the goal of providing quality work at a price that is fair to me and the customer. I don't pad it with "what ifs", thus there is no room for negotiation--which as has been mentioned, quite rightly plants the seed of mistrust.

For advertising, I rely on word of mouth about the quality of my work and my honesty and integrity. It's been working for five years now.