Trying to sell with high prices

Evaluate for your confidence

We all know it is a VERY tough market now. So it doesn't shake your confidence, I'd suggest going back to your prospect and ask if you could talk to him, see the other quote again, and see the job after it is finished. This is NOT going to retreive the sale.

Mr. Prospect, I've been thinking about your job and would like to ask a favor. It's not unusual for us to be slightly higher than other companies because of the quality of materials and labor we use, but I was frankly shocked we were that much different. Would mind helping me evaluate the differences in what we quoted and what you selected? You've already choosen the other contractor, so it isn't impacting that, but I'd like to try to determine if we are suddenly out of line in the local market, if we mis-figured something, or if there was a dramatic difference in what we quoted versus the other guy. Obviously, if it was pretty close to apples to apples and I didn't make a mistake figuring something, we need to evaluate our estimating procedure. Would you mind helping me by blah blah blah as above?

DID you make a mistake on the quote? Is this a one-time thing and maybe the other guy made a mistake and is doing it for below cost? Is your pricing structure fair and competitive as in the past? Have other contractors priced themselves at dirt just to try to work during the winter?

If you go back to your prospect chances are he wouldn't mind letting you compare after the job is over. DON'T nitpick, only significant differences should be noted. If the other guy screwed it up, you may have lost that job, but the prospect may refer you to other people if he is unhappy with the final job he gets.

Finally, it may just be under the "stuff happens" category. Best wishes.

Thanks for the help guys. The customer I talked about has not made a decision yet, but it does not look good. He is one of a handful of clients where I have noticed a large difference in pricing. I am in the Houston, Tx market and what I have noticed is some of our compitition has been doing work at cost just to keep there crews.

I think for the most part our customers are the same. We just are not getting as many leads and when I do, I run into the situation I described earlier. It is frusterating when you no you have something and you get blown out of the water on priceing. I can over come 3k-4k but 6k on a 23k job is tough.

I might need to change my approach. I like to be the second company in and offer a better product at a slightly higher price, but maybe I should try to be the first one in and blow them away with our quality and reputation.

Any additional advice would be welcome. Thanks for your time.

I'm in agreeance with Graham's sentiment.

One of the problems with this entire industry is that to become a sustainable business, you have to pay a serious amount of money just to be able to practice your business.

Company A pays its licensing fees so that it isn't pulled off a job by code enforcement, pays for continuing education to avoid common pifalls and also to keep itself knowledgable of new products and how to properly apply them, pays insurance in case its tools are stolen or an employee of theirs makes a mistake and damages a house severely, pays it's employees well because they want knowledgable and capable people, pays for advertising (web/business cards/flyers/booth at a home show, etc...) to keep leads coming in, pays to keep their vehicles and tools up to date and serviced, and THEN it pays taxes on the income it earns.

Company B cuts corners by hiring cheap or illegal labor, doesn't pay for insurance or licensing, remains ignorant of pitfalls and new products and eventually gets nailed for tax fraud. If a company is out of business, it can't warranty its work. Ironically, this is the kind of company where a warranty is most needed. Their materials are cheap, incorrecly applied, and if an accident does happen then the homeowner is completely screwed because you can't get money out of a broke fly-by-night contractor.

Company B can easily underbid Company A because Company A's markup is going to be much higher to account for the costs of doing business. Company A is a rare quality company with goals and plans for the future. Company B is usually just some guy who's worked construction and is living paycheck to paycheck trying to get from one day to the next.

You can use some of those points to help sell your business.

Here's the kicker though (slightly off-topic): I've met some great workers who are terrible businessmen. Sometimes Company B does all the work great and is just shooting themselves in the foot by undercharging to stay "competitive", but really, they're ruining the market for everyone. When a customer's first priority is price and we're over their budget, we usually walk away. If you're bidding jobs ethically at the prices you've predetermined to be necessary for your business goals, then selling the same product for less is taking a loss, no matter how you look at it. We've found that "nickel and dime" clients are nothing but a headache, trying to extract as much as possible out of a contract. I've even had payments withheld if we didn't "throw in" a few extras, because these clients are used to beating up contractors. They know that we'll usually throw in a few hours worth of work rather than go to the trouble of filing a lien.

Comparing my quote to someone else’s hasn’t really helped me much.

Your goal is to make them feel comfortable about working with you. They have to feel confident about working with you. If you can accomplish that most of the other problems will go away.

You should have a presentation planned out so that you can show them how the job will be done.

You’ve got to have a sales system.

A lot of the problems that sales people have could be solved by having a sales system.

You should know what you are going to do from the moment you say “hello” until the moment you leave.

If you do everything the same way every time a lot of these little problems will go away.

When someone tells you “I have another quote for the same thing and it is lower” the problem is that you haven’t demonstrated that you are any different. You haven’t made them feel confident that you are the right guy. Looking at the competitors’ proposal isn’t going to solve that problem.

The competitors proposal isn’t the real problem, you are. You are unprepared to outsell your competitor and that’s why you are getting that response. You’ve got to take 100% of the responsibility for the results you are getting. Blaming the prospect or your competitor isn’t going to solve anything and neither will looking at their quote.

If they were sold on you the objection would never come up. It’s all about you and your sales skills. You’re not prepared to close at higher prices.