Contractor Talk - Professional Construction and Remodeling Forum banner

1 - 15 of 15 Posts

·
Registered
Joined
·
403 Posts
Discussion Starter · #1 · (Edited)
When you discount your price 100% of the discount comes out of your profit because all other expense are fixed. DONT DO IT. A discount of $300 off a $6000 total project price is 5% off the total price but it's a huge percentage off your profit margin. Want a shocker? Based on your profit margins, figure out what percentage a $300 discount would cost you off your profit margin on a $6000 sale. It's huuuuge.

Here are some proven strategies to overcome price objections.

1. Feel, Felt, Found - I am sorry you feel that way, Another person I spoke to A WHILE AGO felt that way at first glance like you do. What they found is they were able to understand the pricing better when we reviewed the details of what is required to meet their specifications. Let's review the scope of work step by step to see if there is something we can remove to get the cost down.

2. Reduction to the ridiculous - I think we can agree the benefits of this project will last for well over 20 years. That's almost 8000 days. The $700 price difference of the life of a project equates to pennies per day. Putting it that way are you sure you want to take something off the scope of work to save a few pennies a day?

3. Tell me what you like takeaway - Tell me what you like about doing what we have discussed (Help them list the benefits they told you they wanted) Which of those benefits would you like to remove to lower the cost of your project?

4. Refocus to best value not lowest price - While it is true I am not always the lowest priced option, most folks I speak to are looking for the best value available more than the lowest price. I think we can agree that means choosing long term quality and satisfaction over something that may be priced lower but will fail to meet your expectations over time. I have been careful about estimating all the costs of your project and we have gone over them carefully to be sure they meet your requirements perfectly. Does it make sense at this point to remove some of your requirements to lower the cost?

There is a thousand ways to overcome price objections. Don't get caught unprepared ever again. If this is a real ongoing problem for you then do this

A. Google "Overcoming price objections"
B. Spend a few hours reading dozens of approaches to find what you like best
B. Choose or adapt those that best fit your personality and USP
D. Practice them with the dog, wife, parent or buddy until you have the ability to employ them with fluid grace and comfort

STOP SUFFERING, FEELING AWKWARD, LOSING SALES AND DISCOUNTING. LEARN IT! NOT HARD! GOOD LUCK! HAVE FUN WITH IT! :thumbsup:

EDIT: I just did a search on Contractor talk for "objections" There is a massive amount of information on here about overcoming customer sales objections specific to contracting. You will find the same objections coming up over and over. Once you master them, you can focus on something else to advance your business because your sales skills will be in the bag once and for all.
 

·
Administrator
Maker of Fine Sawdust
Joined
·
51,771 Posts
I never get your price is too high. They just don't call back.
 

·
Registered
Joined
·
403 Posts
Discussion Starter · #4 · (Edited)
I never get your price is too high. They just don't call back.
Others do. Especially the new contractors that have not learned how to qualify like the old timers. If newbies are already at the table they might as well learn how to meet the challenge of customer objections instead of floundering and losing the opportunity.

Many new contractors also have a very small number of leads and need to hustle more to turn a weaker lead into a sale with better sales skills until the new contractor can develop a larger lead flow and then qualify away price objectors from their sales funnel. This post is for newbies.

You have been around a long time. I imagine you are doing fine. If not or if you are looking to improve on your sales results, it looks like you could follow up with the customer to flesh out the reasons they are not calling back and then up your sales skill set to turn a few more of them into sales.

Your choice.
 

·
Champion Thread Derailer
Joined
·
1,228 Posts
Others do. Especially the new contractors that have not learned how to qualify like the old timers. If newbies are already at the table they might as well learn how to meet the challenge of customer objections instead of floundering and losing the opportunity.

Many new contractors also have a very small number of leads and need to hustle more to turn a weaker lead into a sale with better sales skills until the new contractor can develop a larger lead flow and then qualify away price objectors from their sales funnel. This post is for newbies.

You have been around a long time. I imagine you are doing fine. If not or if you are looking to improve on your sales results, it looks like you could follow up with the customer to flesh out the reasons they are not calling back and then up your sales skill set to turn a few more of them into sales.

Your choice.
I have read a few of your posts and found them to be quite informative and very helpful.

I am curious to learn how exactly do "you" qualify leads/prospective clients? Based upon some of the things you've shared thus far in the forum, I venture to guess you have a pretty good method (perhaps different from others) to do so.

I really appreciate the time and effort you've taken to provide valuable insight in dealing with some of the difficulties that face most of us here.
 

·
Registered
Joined
·
8,139 Posts
I think you have to pick your battles. Rebutting a cold lead is a tough battle. Rebutting a complicated project that you have "made a friend" on is easier.

If people dont M.A.F ^ then they have nothing left but to drop their pants.

Make a friend, close more, earn more. I dont spend much time rebutting or going back and forth. I put my best effort in the first time and the chips fall where they may.
 

·
Registered
Joined
·
1,559 Posts
Qualifying a new client "MAY" start as soon as you drive up to the house.
How does it look, what car do they drive, how are they dressed, how are you dressed.
Is the house clean, do they make eye contact, or do they look all around.
Are they focused on the project or does their attention wander.
How does your gut feel.
What is the quality of other work done in the house.
How do they speak about other contractors that they have dealt with.
While none of these is a sure indication of anything, a combination of several, may be a good indication of what you can expect to come in the future.
 

·
I'm The BOSS
Joined
·
1,904 Posts
I agree with polebarn and b.d.r. good points on pre-qualifying.

My pre-qualifying starts with my first contact with the potential customer. I try to get as much info about the current project and as
much as I can about previous projects they may have has done. I try to spend as much as 10 minutes on the phone with them. I get the address make a time and date for a meeting with them.

After I have the address I Google it. Street view can give you a little heads up on the home, property and area. I also Google the homeowners name or names. This give a heads up to any potential problems.

DOES anyone us the COST vs VALUE report as a sales tool ?
 

·
Livin the dream...
Joined
·
6,624 Posts
I am just starting out in business full time but am finding how important qualifying people is. Failure to qualify a customer who has no bearing on reality can result in them getting a price and going bazzerk, spreading bad PR all around town about how you are a "rip off" or "priced out of this world."

Better to identify these people and move on before a hard number is handed to them otherwise we run the risk of a ripple effect of bad PR.

Just had one that wasted a few hours of my time and went nuts when I handed her the price all because I failed to qualify. And I had qualified in the sense of looking at their home, there occupations, and social status. These people just had no bearing on reality as to costs to do anything. If I would have got a budget number out of them I could have ended it then and there with a much better "feeling" in the business relationship.
 

·
Registered
Joined
·
3,920 Posts
If most people think your price is too high, either it is, or you aren't fishing in the right stream. Know your audience, and know your product. If the prospect's major issue is the outright cost, sobeit. It's usually not a race worth seeking.

However, if somebody tells you that you are too high, they are also telling you that they are interested in what you have to offer. Would it kill you to knock off 10%? Odds are if you know your expenses, and profit, the 10% break would still make the job profitable.

As a rule, giving in, will reap rewards in the future. Every scenario is different, but refusing to budge, is an invitation for a prospect to look somewhere else. Price accordingly.
 

·
Registered
Joined
·
3,920 Posts
I am just starting out in business full time but am finding how important qualifying people is. Failure to qualify a customer who has no bearing on reality can result in them getting a price and going bazzerk, spreading bad PR all around town about how you are a "rip off" or "priced out of this world."

Better to identify these people and move on before a hard number is handed to them otherwise we run the risk of a ripple effect of bad PR.

Just had one that wasted a few hours of my time and went nuts when I handed her the price all because I failed to qualify. And I had qualified in the sense of looking at their home, there occupations, and social status. These people just had no bearing on reality as to costs to do anything. If I would have got a budget number out of them I could have ended it then and there with a much better "feeling" in the business relationship.
Lets say somebody wants to trim out a 1,500 ft/2 home. Could you shoot a general number (good, better, best)? That way, while chatting, you can give a general number, to see their reaction. If still interested, then bust out the abacus, to give them an exact number. There is no sense in calculating, if they are turned off from the get-go.
 

·
Champion Thread Derailer
Joined
·
1,228 Posts
If most people think your price is too high, either it is, or you aren't fishing in the right stream. Know your audience, and know your product. If the prospect's major issue is the outright cost, sobeit. It's usually not a race worth seeking.

However, if somebody tells you that you are too high, they are also telling you that they are interested in what you have to offer. Would it kill you to knock off 10%? Odds are if you know your expenses, and profit, the 10% break would still make the job profitable.

As a rule, giving in, will reap rewards in the future. Every scenario is different, but refusing to budge, is an invitation for a prospect to look somewhere else. Price accordingly.
The main problem I see with this approach is: If you know your numbers (i.e., all overhead expenses, all direct job costs [labor and materials], and your markup and profit needed to remain viable for years to come), then if you discount, or deviate from these numbers, something will have to give concerning these numbers. Either you will have to forgo profit, your salary, some expense, etc, which invariably cannot be made up on the next job. I take the approach that my numbers are what they are and try to sell quality and service, not price first and foremost. Over the years I've found that if price (lowest/best) is the only concern, then that isn't the type of customer I need to be pursuing. Seems to come back to bite me in the rear-end most every time, at least this has been my experience (and I have some real duesie's to tell of).
 

·
Registered
Joined
·
4 Posts
If people are telling you that you're expensive they are honestly being lazy and haven't gotten enough estimates. Save time and ask them what's there budget. I know many contractors who do this before they go into their spill and it always sees to work. It also makes it seem like your flexible.
 

·
Registered
Joined
·
3,920 Posts
The main problem I see with this approach is: If you know your numbers (i.e., all overhead expenses, all direct job costs [labor and materials], and your markup and profit needed to remain viable for years to come), then if you discount, or deviate from these numbers, something will have to give concerning these numbers. Either you will have to forgo profit, your salary, some expense, etc, which invariably cannot be made up on the next job. I take the approach that my numbers are what they are and try to sell quality and service, not price first and foremost. Over the years I've found that if price (lowest/best) is the only concern, then that isn't the type of customer I need to be pursuing. Seems to come back to bite me in the rear-end most every time, at least this has been my experience (and I have some real duesie's to tell of).
Some jobs are more profitable than others. Its priced in my "system". As long as I am not paying to work, I'm cool. Still can sell decent products with decent materials. Just got to be aware of expenses.
 
1 - 15 of 15 Posts
Top