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Discussion Starter · #1 ·
Some timely thoughts on this subject near and dear to all our hearts and our wallets, especially in these economic times:


Price too high!

What it really means is that the presentation was too low. If the customer's perception was that this costs too much money that means one of the following:

1. You have commoditized your product. If your customer perceives your product as a commodity like everyone else's, and then the price will become the determining factor. You must differentiate your products from all the others. Brian Tracy recently stated that "94% of all sales in America today are non-price sales. Price is only a factor when a product is a commodity. "If you had a choice between a new Kia at $10,000 and a new Lexis at $12,000, which would you buy?

2. Price objection actually is not true, but sales person believes it. Three years ago, I decided to buy a Jaguar XJ8 convertible. That was the only car that I wanted. I went to three different dealerships and negotiated the best price with each of them. I then returned to the first one. I wanted to do business with this one because of a referral, and they actually had the best price. I sat down with the manager and stated that I wanted to buy from him, but that price was too high. Was I lying? No, I was negotiating. I actually would have paid his price, but I was able to get him to drop his price by another $500.

A psychologist once told me that the opposite of love is not hate, that hate is part of the same emotion. The opposite of love is indifference. Now that struck a note with me. If a customer is indifferent about your product, doesn't it? In the hands of any true sales person that means a sale!

I was consulting with a company that sold their windows at $1,000 each. When asked the number one reason why their customers did not buy their product, they said," Price is too high." In working with companies that had windows at $400 and $700, guess what reason was cited for customer refusal..."Price too high." In fact, I was working with a company in Canada, that charged only $300 Canadian dollars (which was roughly $180 in U.S. dollars), and they said the main reasons customers were not buying their product was the "price was too high."

Of all the above companies, guess which one has the lowest closing sales? You have it --- the Canadian company was only closing 22% prior to a visit from us.

Price tends to be more of an objection in the mind of the sales person, than that of the customer. If your sales people do not believe that your product is worth the money, Fire Them! Sales people must sell from conviction. They must believe that if the customer does not buy from you, they are making a mistake and will not be buying from anyone else. If the sales person does not believe in your product and value, then they never can be great.

It is in belief that the true power of communication lies. As the bible says, "Everything is possible for him that believes." It is conviction that transfers to the customer. Yes! To be successful, you must believe in yourself, and you must also believe in your company and product.

Halos Marketing Group
 

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Non-conformist
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Great post, Mike. I have been in sales for many years, and had I not learned this lesson a long time ago, things would be dismal I'm sure.

There are a couple easy things to remember that should help anyone struggling in this area: First, if the value exceeds the price, people buy; second, price is only one of the factors in every buying decision, and it's not as an important factor as most people seem to think.

Let me add this to further clarify the second point. People buy primarily for one or more of the following reasons: to make money, to save money, to save time, to make things easier, to make them feel better or satisfy a desire, to solve a problem, and/or to take away pain. Notice that price is not on that list.
 

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Price too high!

What it really means is that the presentation was too low. If the customer's perception was that this costs too much money that means one of the following:

1. You have commoditized your product. If your customer perceives your product as a commodity like everyone else's, and then the price will become the determining factor. You must differentiate your products from all the others. Brian Tracy recently stated that "94% of all sales in America today are non-price sales. Price is only a factor when a product is a commodity. "If you had a choice between a new Kia at $10,000 and a new Lexis at $12,000, which would you buy?

2. Price objection actually is not true, but sales person believes it. Three years ago, I decided to buy a Jaguar XJ8 convertible. That was the only car that I wanted. I went to three different dealerships and negotiated the best price with each of them. I then returned to the first one. I wanted to do business with this one because of a referral, and they actually had the best price. I sat down with the manager and stated that I wanted to buy from him, but that price was too high. Was I lying? No, I was negotiating. I actually would have paid his price, but I was able to get him to drop his price by another $500.

A psychologist once told me that the opposite of love is not hate, that hate is part of the same emotion. The opposite of love is indifference. Now that struck a note with me. If a customer is indifferent about your product, doesn't it? In the hands of any true sales person that means a sale!

I was consulting with a company that sold their windows at $1,000 each. When asked the number one reason why their customers did not buy their product, they said," Price is too high." In working with companies that had windows at $400 and $700, guess what reason was cited for customer refusal..."Price too high." In fact, I was working with a company in Canada, that charged only $300 Canadian dollars (which was roughly $180 in U.S. dollars), and they said the main reasons customers were not buying their product was the "price was too high."

Of all the above companies, guess which one has the lowest closing sales? You have it --- the Canadian company was only closing 22% prior to a visit from us.

Price tends to be more of an objection in the mind of the sales person, than that of the customer. If your sales people do not believe that your product is worth the money, Fire Them! Sales people must sell from conviction. They must believe that if the customer does not buy from you, they are making a mistake and will not be buying from anyone else. If the sales person does not believe in your product and value, then they never can be great.

It is in belief that the true power of communication lies. As the bible says, "Everything is possible for him that believes." It is conviction that transfers to the customer. Yes! To be successful, you must believe in yourself, and you must also believe in your company and product

That's actually a quote from Rick Grasso's closing camp from many years ago.
I highly recommend you guys attend one of his seminars. He'll make you a lot of money!
 

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Price too high!

What it really means is that the presentation was too low. If the customer's perception was that this costs too much money that means one of the following:

1. You have commoditized your product.

2. Price objection actually is not true, but sales person believes it.y!
or

3. Your price really IS too high.
 

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i disagree a bit on what Rick Grasso has said. a couple may very well need windows but cannot afford 20k even though they recognize the quality is much better than a 10k window job. that is where business sense comes into play.
"Mr. Jones, i fully understand your point,i have been in your situation as well and i think it would be unfair for me to recommend you spending 20k for any sort of project no matter how important it is due to you barely scraping by at the moment. let me tell you what you should do if you don't mind,forget about spending 20k right now,just replace half or one third of your windows starting with the most needed first. then in 6 months or a year,we will do another stage. that makes me feel much better and it will also be a wise decision on your part.
I can get you a bunch of cheap windows but that will just be flushing money down the toilet so in good conscience i simply cannot do that. that sounds like a much more realistic plan so lets go that route"
 

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i disagree a bit on what Rick Grasso has said. a couple may very well need windows but cannot afford 20k even though they recognize the quality is much better than a 10k window job. that is where business sense comes into play.
"Mr. Jones, i fully understand your point,i have been in your situation as well and i think it would be unfair for me to recommend you spending 20k for any sort of project no matter how important it is due to you barely scraping by at the moment. let me tell you what you should do if you don't mind,forget about spending 20k right now,just replace half or one third of your windows starting with the most needed first. then in 6 months or a year,we will do another stage. that makes me feel much better and it will also be a wise decision on your part.
I can get you a bunch of cheap windows but that will just be flushing money down the toilet so in good conscience i simply cannot do that. that sounds like a much more realistic plan so lets go that route"

Yep, another great response with NO price drop!

Great job
 

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in regards to what? and according to whom?
According to the market. Market determines price, not the other way around. For houses, cars, goods and services, everything.

If demand for your service is high, and/or supply is low, you can charge more. If demand is low and supply is high, like now, you can keep your prices at the same rate, but you won't sell as much.

if you're price is really too high, get better customers....
That's just targeting a different market - which you can try to do to maintain your price point, but it might also be too difficult, or too expensive to make that transition.

Why do you think so many residential GCs are trying to get into commercial work now? Because the demand for their services is way down.

Why do you think so many commercial GCs have cut their profit margins from 15-20% two years ago to 5% or even 0% today?
Because demand is down and supply is way up.

They guy who might have spent $100 on your bottle of wine yesterday sure isn't going to buy it from you once the shop down the street starts selling the exact same wine for $50. I don't care how nice your store is or how friendly and knowledgeable your salespeople are.

It's much easier to complain about 'price shoppers' and 'craig's list hacks' and blame them for decreased revenue, than doing what needs to be done to compete in a tougher market.

I disagree with the article because it paints an overly rosy picture about the effectiveness of salesmanship and attitude, and it completely discounts the very real possibility that SOMETIMES your price really IS too high for your market.

You can try to differentiate your service from your competition as much as you want, but if the customer doesn't think that is added value, then they won't pay the additional cost.
 

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Discussion Starter · #13 · (Edited)
According to the market. Market determines price, not the other way around. For houses, cars, goods and services, everything.

If demand for your service is high, and/or supply is low, you can charge more. If demand is low and supply is high, like now, you can keep your prices at the same rate, but you won't sell as much.



That's just targeting a different market - which you can try to do to maintain your price point, but it might also be too difficult, or too expensive to make that transition.

Why do you think so many residential GCs are trying to get into commercial work now? Because the demand for their services is way down.

Why do you think so many commercial GCs have cut their profit margins from 15-20% two years ago to 5% or even 0% today?
Because demand is down and supply is way up.

They guy who might have spent $100 on your bottle of wine yesterday sure isn't going to buy it from you once the shop down the street starts selling the exact same wine for $50. I don't care how nice your store is or how friendly and knowledgeable your salespeople are.

It's much easier to complain about 'price shoppers' and 'craig's list hacks' and blame them for decreased revenue, than doing what needs to be done to compete in a tougher market.

I disagree with the article because it paints an overly rosy picture about the effectiveness of salesmanship and attitude, and it completely discounts the very real possibility that SOMETIMES your price really IS too high for your market.

You can try to differentiate your service from your competition as much as you want, but if the customer doesn't think that is added value, then they won't pay the additional cost.
I suspect part of why you write this is because you list your occupation as:

General contractor.

You have a commodity mentality - this is a bit of evidence :

They guy who might have spent $100 on your bottle of wine yesterday sure isn't going to buy it from you once the shop down the street starts selling the exact same wine for $50. I don't care how nice your store is or how friendly and knowledgeable your salespeople are.
Construction should not be looked at as everybody selling the same wine, where one contractor decides to sell that wine for $50.00 and another decides to sell the same wine for $100.

It should be looked upon as one contractor sells a specific wine worth $50 and another contractor sells a different specific wine that is worth $100.00, not the same wine at different prices. :thumbsup:
 

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Well said Mike. I'm the only one that offers my services. And I'm selling a package of services, not xxxxxxxx installed. Any idiot can slap some trim in. Will it look right? By someone that is neat, clean, (relatively) polite, etc? And for the most part that is what homeowners can see, more so than quality of work in many cases.
 

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Sometimes you eat the bar, and sometimes it eats you.

We offer 3 pool services packages.

1. Full Package - We do everything.
2. Cleaning Package - We manage chemicals and do a quick clean.
3. Chemical Only


What I have done is offer $50 off the first month of service if they buy a PoolRX unit. $59.99 ( I sell it at cost ) It helps keep our chemical costs down.


However, people still want a full package for the cheapest price.

This way, I can give them a full package at the cheapest price, if they buy the Pool RX Unit.


Today, I had a customer that wants the cheapest price without buying a PoolRX unit.

I took consideration it is pretty close to my other accounts, and it is screened in pool which will use less chemicals.


Sometimes you got to slum it to get accounts :rolleyes:
 

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great thread. I'm learning that I have to adjust the value, sales pitch, and pricing of my jobs depending on the targeted buyer.
If I'm going after a super high end client, I pitch quality, expertise, elitism etc..money is not the issue. As a matter of fact I find most wealthy people will gravitate towards the higher number b/c it represents quality for them.
If i'm going after everyday Joe, I push value, Because every working man loves a good deal.
 

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great thread. I'm learning that I have to adjust the value, sales pitch, and pricing of my jobs depending on the targeted buyer.
If I'm going after a super high end client, I pitch quality, expertise, elitism etc..money is not the issue. As a matter of fact I find most wealthy people will gravitate towards the higher number b/c it represents quality for them.
If i'm going after everyday Joe, I push value, Because every working man loves a good deal.
 

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you should always push value; that does'nt mean you are cheap. quite concievably the most expensive contractor will provide the most value. this is done by the quality of his product,his craftsmanship,his warranty ect...
 
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Economy must be booming wear you guys live. Good for you

I guess it all depends who your selling to or working for but even the so called high end customers here are watching there money.

We have been noted as being high compared to other painting contractors in our work area but that’s where my selling comes in and references of which I have many but with that being said this is without a doubt the worst economy I have seen since the 70's....

Much sucess and only the strongest will survive this economy, I've seen many come and go....

 
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