Price Is Not Negotiable

 
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Old 09-25-2008, 10:24 PM   #61
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Re: Price Is Not Negotiable


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Originally Posted by Carport King View Post
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.


at the end of the day, I am also trying to build a business that makes high profit. We are talking about two different types of business models. High volume Home Improvements and High scale design remodeling,( depending on who we are talking about.......ha).
Some of you understand what I was talking about before it came down to all that "off topic stuff"

I mentioned negotiating is not a drop your pants, give away, discount coupon BS, we have relationships blah,blah,blah.

I WAS SAYING that to help close deals, get the one that maybe would get away. learn to negotiate.

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 similar in a few aspects...


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


Last edited by Remodel Bud; 09-25-2008 at 10:28 PM.
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Old 09-25-2008, 10:53 PM   #62
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Re: Price Is Not Negotiable


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Originally Posted by Remodel Bud View Post

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
All things being equal, we'd better not be 6K higher. I can't live with 2 or 3 percent, but not 7 percent higher or I'll know the reason why. Now, that is ALL things being equal. We don't offer equal. My business model is to offer unequal as much as possible. We go overboard to please our clients and we don't quit until they smile with pride or we haven't done our job.

Questions to ask in this situation:

Did you check all references and look at work?
Did you contact the building dept and code enforcement as we suggested?
Are you sure the scopes of work are the same?
Are the differences in allowances?


If yes to all of the above.. "Good luck and thanks for letting us into your home and considering us for the job."

Send them a gift card for a local restaurant and move on to the next job. Nothing more to do.

Now that is us. I know what we do when we sit down with clients and if that is where we are, then that is where we are. I'm not gonna bend for a 7 percent cut in price. In some cases, that can be my entire profit on the job. Ain't happening. That 6K could go "poof" on the lumber package and the site work.

In all honesty, this would be a tough pill for me to swallow and I'd be going out to see these folks myself in person and find out why they didn't go with us. I'd go over how we handled all contacts and be looking to find out how we manged to hire a client that was buying on price. We work like hell to weed them out and we have a good system.

I've lost one job in the last few years to competition and that was to a coin toss. Go figure.
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Old 09-25-2008, 10:53 PM   #63
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Re: Price Is Not Negotiable


Sometimes I get someone that wants to negotiate the price, this is on jobs typically under $5k. Usually I walk away, but if I'm in a good mood I'll ask what they think is a good price. They almost always offer a number below my cost, sometimes half my cost. I might agree with the strategy if the sale were a higher amount, or if I thought 10% would typically make a sale that wasn't already a sale.

My experience has been that many people ask for a discount before they buy. If I stand firm, they almost always buy anyway. It's rare for me to get the feeling I'll make a sale by dropping a little on the price. The negotiators want me to drop a LOT on the price.
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Old 09-25-2008, 10:55 PM   #64
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Re: Price Is Not Negotiable


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Originally Posted by Tinstaafl View Post

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.
Aside from all the great information and wisdom you can comb through this thread to find, the above quote is the wisest thing I've read all week.
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Old 09-25-2008, 10:57 PM   #65
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Re: Price Is Not Negotiable


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Originally Posted by Double-A View Post
All things being equal, we'd better not be 6K higher. I can't live with 2 or 3 percent, but not 7 percent higher or I'll know the reason why. Now, that is ALL things being equal. We don't offer equal. My business model is to offer unequal as much as possible. We go overboard to please our clients and we don't quit until they smile with pride or we haven't done our job.

Questions to ask in this situation:

Did you check all references and look at work?
Did you contact the building dept and code enforcement as we suggested?
Are you sure the scopes of work are the same?
Are the differences in allowances?


If yes to all of the above.. "Good luck and thanks for letting us into your home and considering us for the job."

Send them a gift card for a local restaurant and move on to the next job. Nothing more to do.

Now that is us. I know what we do when we sit down with clients and if that is where we are, then that is where we are. I'm not gonna bend for a 7 percent cut in price. In some cases, that can be my entire profit on the job. Ain't happening. That 6K could go "poof" on the lumber package and the site work.

In all honesty, this would be a tough pill for me to swallow and I'd be going out to see these folks myself in person and find out why they didn't go with us. I'd go over how we handled all contacts and be looking to find out how we manged to hire a client that was buying on price. We work like hell to weed them out and we have a good system.

I've lost one job in the last few years to competition and that was to a coin toss. Go figure.
all that considered what do you do if you are consistently the highest guy by 10% or more?
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Old 09-25-2008, 11:09 PM   #66
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Re: Price Is Not Negotiable


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Originally Posted by Double-A View Post
All things being equal, we'd better not be 6K higher. I can't live with 2 or 3 percent, but not 7 percent higher or I'll know the reason why. Now, that is ALL things being equal. We don't offer equal. My business model is to offer unequal as much as possible. We go overboard to please our clients and we don't quit until they smile with pride or we haven't done our job.

Questions to ask in this situation:

Did you check all references and look at work?
Did you contact the building dept and code enforcement as we suggested?
Are you sure the scopes of work are the same?
Are the differences in allowances?


If yes to all of the above.. "Good luck and thanks for letting us into your home and considering us for the job."

Send them a gift card for a local restaurant and move on to the next job. Nothing more to do.

Now that is us. I know what we do when we sit down with clients and if that is where we are, then that is where we are. I'm not gonna bend for a 7 percent cut in price. In some cases, that can be my entire profit on the job. Ain't happening. That 6K could go "poof" on the lumber package and the site work.

In all honesty, this would be a tough pill for me to swallow and I'd be going out to see these folks myself in person and find out why they didn't go with us. I'd go over how we handled all contacts and be looking to find out how we manged to hire a client that was buying on price. We work like hell to weed them out and we have a good system.

I've lost one job in the last few years to competition and that was to a coin toss. Go figure.
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Old 09-25-2008, 11:25 PM   #67
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Re: Price Is Not Negotiable


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Originally Posted by Tinstaafl View Post
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.
There isn't anything wrong with that. You deserve what you deserve. I believe in building value and working with the highest of ethics & won't tolerate anything less. THIS subject is being blown way out of proportion and horrible assumptions are being made about people who don't see eye to eye, (by one person) that if we negotiate we are running a slick tin man biz. NOT the case.
If i can chose to work for less a profit margin on a few jobs than to not work, i'll choose the less of a profit margin and evaluate the situation before I decide. The chances of getting other work around that job are good, referrals increase and more people see our company.
I really find it hard to believe that some people haven't had to negotiate, even if it is nominal.
This works for me and has helped many companies achieve projects they may not of otherwise had. For you people that do not negotiate, so be it. It is part of everyday life and always will be. It is part of sales and always will be. IT does not have to be a negative thing. It is only what you perceive. I try to accomplish a certain annual profit percentage and usually do, but if it is slightly off.......I still am a happy business man.
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Old 09-25-2008, 11:28 PM   #68
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Re: Price Is Not Negotiable


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Originally Posted by rbsremodeling View Post
all that considered what do you do if you are consistently the highest guy by 10% or more?
If all things are equal, and I mean all, then I will know the reason I'm 10% higher. Let's face it guys, we can't even agree on the same make and model of truck to drive, you really think we're gonna build an addition with the exact same scope of work?

This whole scenario assumes two independent businesses with the exact same overhead structure and business models and the same profit goals, while at the same time, offering the same pool of resources, not to mention the same skill sets and tit for tat references.

If that were the case, I would be looking at more than just the 10% price difference. You can bet I'd look into that, but it would not be my priority. My priority would be to get my jaw put back in its proper position because I'd be so shocked that someone in my area actually thinks the same way about money and client satisfaction as I do. I'd also be editing my model on the fly to put me back at bat again ASAP, where I'm comfortable.

I will add this ...

Think like the other guy, make like the other guy.

In other words, do what he does and earn what he earns. Don't try to beat others at their own game. Change the damn rules to be the only one in the game. Your competitors can't compete with what they don't understand, let alone offer.

Cricket anyone?
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Old 09-25-2008, 11:35 PM   #69
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Re: Price Is Not Negotiable


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If all things are equal, and I mean all, then I will know the reason I'm 10% higher. Let's face it guys, we can't even agree on the same make and model of truck to drive, you really think we're gonna build an addition with the exact same scope of work?

This whole scenario assumes two independent businesses with the exact same overhead structure and business models and the same profit goals, while at the same time, offering the same pool of resources, not to mention the same skill sets and tit for tat references.

If that were the case, I would be looking at more than just the 10% price difference. You can bet I'd look into that, but it would not be my priority. My priority would be to get my jaw put back in its proper position because I'd be so shocked that someone in my area actually thinks the same way about money and client satisfaction as I do. I'd also be editing my model on the fly to put me back at bat again ASAP, where I'm comfortable.

I will add this ...

Think like the other guy, make like the other guy.

In other words, do what he does and earn what he earns. Don't try to beat others at their own game. Change the damn rules to be the only one in the game. Your competitors can't compete with what they don't understand, let alone offer.

Cricket anyone?
Nice
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Old 09-25-2008, 11:38 PM   #70
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Re: Price Is Not Negotiable


actually I love this thread

Ok last one for the night. I compete against two other contractors in my area regularly.

I know there mark up and GP margin etc. as well as obviously mine.

Homeowners here will tell you who your competing against no problem, with that info I can put a quote in to reach my mark up, beat the other companies bid and make more than typical on that job because of there markups, all of our work are very similar quality.

Is that unfair?

This is Hypothetical of course
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Old 09-25-2008, 11:48 PM   #71
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Re: Price Is Not Negotiable


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actually I love this thread

Ok last one for the night. I compete against two other contractors in my area regularly.

I know there mark up and GP margin etc. as well as obviously mine.

Homeowners here will tell you who your competing against no problem, with that info I can put a quote in to reach my mark up, beat the other companies bid and make more than typical on that job because of there markups, all of our work are very similar quality.

Is that unfair?

This is Hypothetical of course
UH OH......haaa...

is that negotiating?
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Old 09-26-2008, 07:04 AM   #72
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Re: Price Is Not Negotiable


Customers can be strange.

When they say "can you do it for less". What are they really asking?

It's been my experience that they're asking is there a way we can save any money here?

I like to ask.. How much were you thinking? After they answer, ask them this.

As a customer, what could you do for me that would be of that value? The job is broken down and you yourself can see that the price is a fair one.

Time to get a job sign in the yard for a month, along with 5 references, a letter of recommendation, and before and after pictures of the job... And last but not least a flexible installation schedule.

These things will get you another job... Stop and think... What is your advertising budget running. Who better to advertise for you than a customer?

If you discount a price just to be lowering it, you're screwing up. A discount should be bartered for the equal value of replacing the lead.

Plus! That makes sense to the customer and everybody wins.
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Old 09-26-2008, 09:51 AM   #73
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Re: Price Is Not Negotiable


Quote:
Originally Posted by Double-A View Post
Think like the other guy, make like the other guy.

In other words, do what he does and earn what he earns. Don't try to beat others at their own game. Change the damn rules to be the only one in the game. Your competitors can't compete with what they don't understand, let alone offer.
Or as Sonny would say, change the specs so you aren't pricing the same job.

I used to bid a lot of grant work and new the competition pretty well. If I could find out who was bidding I could adjust my pricing and win the contract. I was very good at keeping busy but never made any money until I stepped away from the crowd and charged what I needed. This move was greatly assisted by changing the specs. and helping the customer see the difference and why.

Negotiation is not a bad thing and proves to be usefull everyday. But if it invloves $$$ it should be less than a dollar or be about adding or subtracting work also.

Good Luck
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Old 09-26-2008, 09:51 AM   #74
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Re: Price Is Not Negotiable


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Originally Posted by Sportioli View Post
As a customer, what could you do for me that would be of that value? The job is broken down and you yourself can see that the price is a fair one.

Time to get a job sign in the yard for a month, along with 5 references, a letter of recommendation, and before and after pictures of the job... And last but not least a flexible installation schedule.

These things will get you another job... Stop and think... What is your advertising budget running. Who better to advertise for you than a customer?
That's a good alternative, and lets face it as long as you have positioned yourself correctly in your market doing something like that takes your buyer out of their typical comfort zone and moves the decisions in another direction. If your competitors have answered the negotiation question from the customer with yes and you've said no but we could do this, you've separated yourself from your competitors.

Like I said, customers don't know what the right price is, there is no right price, they only know the value of the job based upon what anybody coming to their home puts on it.

Negotiations are for buying a used car with a greasy salesman in a plaid jacket. When was the last time you negotiated the price of you meal in a nice restaurant? What would you look like if you did?

I put a proposal together for some people in a 1.5 million dollar home 6 months ago. The wife kept adding and adding high end features, the price came in huge but that was the specs she wanted. She kept stressing the fact that she had 2 other companies who would do it for this or that, I kept stressing the fact that I couldn't for the reasons we all know - we don't cut quality, no short-cuts, built to last...

Last month we got the call to rework the proposal to lower specs. We did and got the job.

What happened to the low baller negotiators?

Last edited by Mike Finley; 09-26-2008 at 09:54 AM.
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Old 09-26-2008, 12:57 PM   #75
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Re: Price Is Not Negotiable


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That's a good alternative, and lets face it as long as you have positioned yourself correctly in your market doing something like that takes your buyer out of their typical comfort zone and moves the decisions in another direction. If your competitors have answered the negotiation question from the customer with yes and you've said no but we could do this, you've separated yourself from your competitors.

Like I said, customers don't know what the right price is, there is no right price, they only know the value of the job based upon what anybody coming to their home puts on it.

Negotiations are for buying a used car with a greasy salesman in a plaid jacket. When was the last time you negotiated the price of you meal in a nice restaurant? What would you look like if you did?

I put a proposal together for some people in a 1.5 million dollar home 6 months ago. The wife kept adding and adding high end features, the price came in huge but that was the specs she wanted. She kept stressing the fact that she had 2 other companies who would do it for this or that, I kept stressing the fact that I couldn't for the reasons we all know - we don't cut quality, no short-cuts, built to last...

Last month we got the call to rework the proposal to lower specs. We did and got the job.

What happened to the low baller negotiators?
Negotiating isn't about low balling, it isn't about sleazy jackets either. It is about working with your customer and not with price only!

This caught my eye, because I started a thread on referrals and job signs for us smaller scale guys( mike your excluded ) on how to use a job sign to your advantage. It is exactly like using in the place of marketing money to negotiate. Negotiate for some reason, Finley thinks is only about money, sleaze, tin men but yet reviewing specs on a less expensive home to get within her budget is just that, [Bnegotiating.][/B]

There are many ways to negotiate, you don't have to assume it is right to the money.

You remind me of a politician, wafflingIn all seriousness, i see your point and agree, it is vastly different with a high end builder & a home improvement company that is high volume.

The part that really me off is that you assume because in our business we are plaid jackets & tin men .........you watch too many movies.
I work hard for respect as I am sure you do.....as long as you don't build the money pit.

By the way everyone. Here is a sales meeting for Mike. He loves this stuff. Copy and paste the link.


http://www.youtube.com/watch?v=TROhlThs9qY
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Old 09-26-2008, 01:39 PM   #76
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Re: Price Is Not Negotiable


LOL,

Well at least you finally showed a sense of humor!

Coffee is for closers!

ABC BABY!

Great movie.

+ YouTube Video
ERROR: If you can see this, then YouTube is down or you don't have Flash installed.
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Old 09-26-2008, 01:47 PM   #77
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Re: Price Is Not Negotiable


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LOL,

Well at least you finally showed a sense of humor!

Coffee is for closers!

ABC BABY!

Great movie.

]
how did you get the screen shot on here?

sorry, i take things too personal sometimes......uh......most of the time. I had some people tell me your a good guy.
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Old 09-26-2008, 01:58 PM   #78
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Re: Price Is Not Negotiable


The biggest problems the home improvement industry has all come down to one thing - our industry is filled with knuckle heads who can't, won't or don't know how to figure out profitable pricing.

The ability to pay living wages to employees so they can support their families, the ability of our industry to attract new young workers to the trades as career and everything else all revolves around profitable pricing.

Sorry bud, but I'll never condone lowering prices to get a job. Teach how to sell, teach how to earn, don't teach how to close jobs by lowering prices.
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Old 09-26-2008, 02:46 PM   #79
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Re: Price Is Not Negotiable


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Originally Posted by Mike Finley View Post
The biggest problems the home improvement industry has all come down to one thing - our industry is filled with knuckle heads who can't, won't or don't know how to figure out profitable pricing.

The ability to pay living wages to employees so they can support their families, the ability of our industry to attract new young workers to the trades as career and everything else all revolves around profitable pricing.

Sorry bud, but I'll never condone lowering prices to get a job. Teach how to sell, teach how to earn, don't teach how to close jobs by lowering prices.
Maybe thats why you were a consultant for awhile, to try and help people run an effective business so they can earn money& establish longevity in this industry. There are good and bad consultants just like any business.But i would take one on one mentoring from a successful person anyday of the week and twice on Sunday.

There are so many tools available to people today to succeed these days; Score is a free service from professionals is the business, yet 1% even know about it.. The biggest problem I have run into is seeing contractors that start a business with one job, then two and don't start planning for the third or fourth. NO, you don't have to drop the price if you learn value, quality and operate the business organically, from honesty, good work & excellent communication.

Generally, it is the business aspect that hurts talented young remodelers. I can admire anyone for standing up to their beliefs and I can look at both sides of the fence. All I really want is to see more contractors operate properly and get success early. It can be done with business planning and mentoring & It shouldn't cost an arm and a leg. There are many tools to succeed. So keep posting, keep offering advice. It is good to see people are putting creative thought into this----THAT is worth its weight in GOLD

Last edited by Remodel Bud; 09-26-2008 at 02:51 PM.
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Old 09-26-2008, 08:16 PM   #80
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Join Date: Jun 2008
Location: Nashville
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Re: Price Is Not Negotiable


Thanks you all for the fine opinions. Thank you Mike and Bud for coming down so sternly on opposite sides of this subject and holding your positions in such a lively debate. Your poler positions brought more discussion and comments to the subject than i could have hope for. I got a pretty good idea on how to go about my presentations and than some. I may be a bit of a hayseed in some respects and that is why i appreciate this site so much. Thanks you all

Mark
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