Selling To Price Driven Customers

 
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Old 02-17-2017, 02:09 PM   #1
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Selling To Price Driven Customers


Just to start out, I don't usually try to sell to people who are cost driven. Usually that bottom line is all they care about and if you're trying to run a business based on quality you'll just never see eye to eye.

With that said, I just delivered a proposal to a potential customer who can only see the price tag. One three-quarter bathroom with premium waterproofing and tile prep, tile shower and floor, and good quality fixtures and vanity $9500. Another bathroom with similar finishes that is 30% larger and includes a good quality Kohler tub and changing a single to a double vanity ended up at $15k. That's everything but towel bars included.

I'm pretty confident that I am under what I should be in my market. In fact according to the contractor gurus out there I'm charging 20% less but I should based on my overhead mark up. In situations like this what do you do? Try to persuade them or just except that it's not a good fit? If you could try to persuade them how would you do it?

Usually I wouldn't even look back but it's been a slow start to this year and I'd really like to get the project.
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Old 02-17-2017, 02:37 PM   #2
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Re: Selling To Price Driven Customers


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...Usually that bottom line is all they care about ...
I think you answered your own question.

These situations never turn out well.

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Old 02-17-2017, 02:53 PM   #3
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Re: Selling To Price Driven Customers


Sometimes it's their way of not getting taken for a ride. Give a couple options and let them talk themselves into spending more. Especially if you have a couple who are going back and forth on the selections (you stay out of it).

Round numbers don't help, either. $9430 (or $9640, etc.) might have looked like it had more thought and a sharper pencil behind it.
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Old 02-17-2017, 03:05 PM   #4
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Re: Selling To Price Driven Customers


I just rounded my numbers for the sake of the post. I was actually at $9326 and $15676. He works in radio so I also told him I would subtract $1500 total from both bathrooms if he provided on air advertising. Not a bad deal I don't think.

I'm definitely going to follow up and explain a few of the cost differences but I think he's going to end up hiring the cheapest hack he can find. He's a former NFL player too. Sad.
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Old 02-17-2017, 03:16 PM   #5
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Re: Selling To Price Driven Customers


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I just rounded my numbers for the sake of the post. I was actually at $9326 and $15676. He works in radio so I also told him I would subtract $1500 total from both bathrooms if he provided on air advertising. Not a bad deal I don't think.

I'm definitely going to follow up and explain a few of the cost differences but I think he's going to end up hiring the cheapest hack he can find. He's a former NFL player too. Sad.
Do the explaining in person and go for the close. Good luck.
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Old 02-17-2017, 08:58 PM   #6
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Re: Selling To Price Driven Customers


I would throw in the towel holders!
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Old 02-17-2017, 10:55 PM   #7
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Re: Selling To Price Driven Customers


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He's a former NFL player too.
Those guys always end up great at managing money
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Old 02-18-2017, 10:50 AM   #8
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Re: Selling To Price Driven Customers


Take out the preminum water proofing. Thats just words to them. Greenboard and one coat redguard. Tiled with mastic. Six month warranty. Drop the price a grand and put the other grand in your pocket.

Any time you have a cheapskate use their personal inclinations against them to increase your profit by reducing scope and materials alot and reducing cost a little.

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Old 02-18-2017, 10:51 AM   #9
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Re: Selling To Price Driven Customers


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Take out the preminum water proofing. Thats just words to them. Greenboard and one coat redguard. Tiled with mastic. Six month warranty. Drop the price a grand and put the other grand in your pocket.

Any time you have a cheapskate use their personal inclinations against them to increase your profit by reducing scope and materials alot and reducing cost a little.

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I didnt start out this way. The customers made me who I am.

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Old 02-18-2017, 02:59 PM   #10
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Re: Selling To Price Driven Customers


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I didnt start out this way. The customers made me who I am.

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I hear you but I won't do that. People hire me and they get better than average, even if they're not willing to pay for my best.

I'd rather have no complaints and a great reputation than make a few thousand dollars right now. Let the cheap hack they end up hiring do that- then I'll charge them another 20% to redo it when they realize their mistake.
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Old 02-18-2017, 03:56 PM   #11
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Re: Selling To Price Driven Customers


Quote:
Originally Posted by Hackattack View Post
Just to start out, I don't usually try to sell to people who are cost driven. Usually that bottom line is all they care about and if you're trying to run a business based on quality you'll just never see eye to eye.

With that said, I just delivered a proposal to a potential customer who can only see the price tag. One three-quarter bathroom with premium waterproofing and tile prep, tile shower and floor, and good quality fixtures and vanity $9500. Another bathroom with similar finishes that is 30% larger and includes a good quality Kohler tub and changing a single to a double vanity ended up at $15k. That's everything but towel bars included.

I'm pretty confident that I am under what I should be in my market. In fact according to the contractor gurus out there I'm charging 20% less but I should based on my overhead mark up. In situations like this what do you do? Try to persuade them or just except that it's not a good fit? If you could try to persuade them how would you do it?

Usually I wouldn't even look back but it's been a slow start to this year and I'd really like to get the project.
If their focus is on price, you've lost the narrative (which is sometimes unavoidable) but one way to get them to realign their thinking is to start looking at things they would need to give up to lower the price.

Once you lower the price without them having to give anything up, you reinforce that
A) your pricing is out of line and subject to negotiation to get it down;
B) they have no idea how deep that well runs; and
C) you actually MAKE THEM focus on price, and get them thinking that maybe there is someone else who will do it for less because again, they have no idea how deep the well runs...
If they don't want to give anything up to lower the price, that is where you need to confidently use your experience to your advantage and explain how long you've been doing it, how well you know your prices and that the only place that money can come from if they aren't looking to pare back what they want is literally out of your pocket and due to the nature of your business, you have limited opportunities in a year to provide for your family...

Then throw it back into their realm and look them in the eye and simply ask them... "Mary and/or Bob, what would your reaction be to your boss if he asked you to make less money for your work?"

If that doesn't move them, they're not a customer that can support your business... time to move on...

We ALL have had jobs that we wanted (for one reason or another) and dropped our pants on in an attempt to "buy the business", but think back on it... although there are exceptions to every rule, aren't these the one's Mr. Murphy visits the most often and end up costing US? As a one-off every now and then and if your business can support it that's one thing, but as a business practice it's a killer... the landscape is littered with contractors who THOUGHT they could be "fastest, cheapest and high quality" contractor out there... the "cheapest" part is usually the nirvana of hitting the widest market...

But if you don't have 3-6 months of Capital Reserves or Emergency Fund, you're most likely not in a position to drop your price anyway to buy the business during a slow period... think of it this way... are you better off making $1000 less to buy the job (or the equivalent of working FREE for how many days) or using that time to find the work that can support your business?

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Old 02-18-2017, 04:21 PM   #12
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Re: Selling To Price Driven Customers


Or send them this link...

http://www.contractortalk.com/f73/sc...ailure-321281/


And tell them it's why the consumer experts (third party reference so it's not just you saying it) don't recommend using the lowest bidder because it carries the most risk...
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Old 02-18-2017, 06:17 PM   #13
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Re: Selling To Price Driven Customers


Whenever I was desperate for work I took on the worst jobs...bid too low, worked for peanuts and felt like a construction prostitute.

After I got bent over a few times, I realized I had to know exactly how long the job would take me, the cost of materials, any other costs and then figure out what I wanted as a profit. I'd drop the detailed bid in their laps and if they were interested we'd agree to a contract. If not, I'd thank them and move on. I got pretty good at avoiding HO's that weren't to my likings. But everytime I was really needing work, I'd bend my rules, take on a crappy job and which I always regretted.

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Old 02-18-2017, 06:19 PM   #14
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Re: Selling To Price Driven Customers


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I didnt start out this way. The customers made me who I am.

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You could very easily get eaten up by that.
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Old 02-18-2017, 08:37 PM   #15
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Re: Selling To Price Driven Customers


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...really needing work....bend my rules...I always regretted.
Ain't this God's awful truth.
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Old 02-22-2017, 07:10 PM   #16
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Re: Selling To Price Driven Customers


Cheapskate customers cause more headaches, even if you get the job. Even if you've spent the time to put together a real bid, you're better off cutting your losses unless you really need the work.
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Old 02-23-2017, 10:24 PM   #17
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Re: Selling To Price Driven Customers


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You could very easily get eaten up by that.
I prefer to eat up the customers.

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Old 02-24-2017, 05:41 PM   #18
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Re: Selling To Price Driven Customers


what i find with cheap customers.....they always expect the most!!....you work for free and they arent happy when your done....they always want more

put yourself in the middle of the market, forget about the bottom 50% of the population that looks at price only...

in my area your prices are rock bottom....

im slow right now too...barely working....but i plan ahead for it as im always slow in feb.... i used to drop my prices to almost cost about this time to get some work going..what i always found was they didnt accept right away and would sign 2 months later when i was busy...i wasnt smart enough back then to put a clause (job must sign before march)....now i keep the same prices for everyone

id also look into discussing cost w/ customers before you go to their house. i get tons of calls lately asking for work..they always say ''come over and give me a bid''...i try to qualify them 1st....give them a rough price...many times their budget is 1/2 what it needs to be

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Old 02-24-2017, 06:04 PM   #19
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Re: Selling To Price Driven Customers


I get this from time to time customers who want a whole list of things delivered on a stupid small budget.

I don't beat around the bush I simply tell them I took your list and your budget and this is what you can get for it.

There are a couple things we can do if that doesn't work for you either increase the budget, change items or drop items.

At the end of the day I can't make water out of wine if they want to find someone willing to work for less money that is their choice

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Old 02-24-2017, 06:22 PM   #20
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Re: Selling To Price Driven Customers


Tell them you will see what you can do. Switch to a fiberglass surround and a few other lower price point items with a number that will blow them away.

The key to this is to act genuinely surprised if they are disappointed that the line items switched with the price. Three things could happen after this. They buy the original project. Take the low price and accept the altered scope. They will hate you. Regardless you are setting the tone and not positioning yourself for failure.

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