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#61 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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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#62 | |
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Moderator
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Re: Price Is Not NegotiableQuote:
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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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y. New York Times, July 20, 2006 |
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#63 |
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Pro
Trade: Electrical Contractor
Join Date: Nov 2007
Location: Northern Illinois
Posts: 731
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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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#64 | |
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Construction Marketer
Trade: Construction Dude w/ Website Skills
Join Date: Feb 2008
Location: Nashville
Posts: 288
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Re: Price Is Not NegotiableQuote:
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#65 | |
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Professional Instigator
Trade: Design Build Remodeling Contractor DC MD
Join Date: Nov 2007
Location: Washington, DC/ Maryland
Posts: 6,872
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Re: Price Is Not NegotiableQuote:
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#66 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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#67 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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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#68 | |
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Moderator
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Re: Price Is Not NegotiableQuote:
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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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y. New York Times, July 20, 2006 Last edited by Double-A; 09-25-2008 at 11:31 PM. |
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#69 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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#70 |
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Professional Instigator
Trade: Design Build Remodeling Contractor DC MD
Join Date: Nov 2007
Location: Washington, DC/ Maryland
Posts: 6,872
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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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#71 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
is that negotiating? |
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#72 |
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Pro
Trade: Painting
Join Date: Dec 2007
Location: Louisville KY
Posts: 201
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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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#73 | |
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DavidC
Trade: Remodeler
Join Date: Feb 2008
Location: NNY
Posts: 1,917
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Re: Price Is Not NegotiableQuote:
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 Dave
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www.CookContractingLLC.com |
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#74 | |
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Chief Toilet Mover
Trade: Bathroom Remodeling
Join Date: Apr 2004
Location: Littleton, Colorado
Posts: 14,078
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Re: Price Is Not NegotiableQuote:
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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#75 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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, waffling In 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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#76 | |||
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Chief Toilet Mover
Trade: Bathroom Remodeling
Join Date: Apr 2004
Location: Littleton, Colorado
Posts: 14,078
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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.
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#77 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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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#78 |
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Chief Toilet Mover
Trade: Bathroom Remodeling
Join Date: Apr 2004
Location: Littleton, Colorado
Posts: 14,078
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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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#79 | |
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Pro
Trade: Remodeling & home improvements
Join Date: Aug 2008
Posts: 407
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Re: Price Is Not NegotiableQuote:
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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#80 |
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Home Improvement Contract
Trade: Handyman
Join Date: Jun 2008
Location: Nashville
Posts: 24
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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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