Contractor Talk - Professional Construction and Remodeling Forum banner

Trying to sell with high prices

2756 Views 10 Replies 9 Participants Last post by  MEL
I have been in construction sales for about 4 years. I started in sunroom and patio cover sales. I recently switched to a company that does more windows, roofs, and siding. I went from a customer who had dreams and visions to a more practical customer who has needs. When I first made the switch I was doing very well but in the last few months my sales have dropped big time. When I started our price was middle of the road, but I have noticed we are the highest now. As an example I talked to a recent customer about hardie siding. The appointment went great I thought one call close all the way. When I told him $23,200 he looked like I killed his dog. I felt it was a great price, so I was a little puzzled at the turn of events. He showed me quotes from my compitition and we were 10k to 6k higher than the rest. He really liked us and wanted to do business but could not justify the cost.

I am not the best closer but I am solid. I have always worked for companies with high profit margins and high prices but they are good companies. If anyone has any advice on how to deal with this type of sales it would help. When I have a slump like this it does effect my confidence. Any tips would be great.
1 - 11 of 11 Posts
What are you doing differently now then when you started and you were doing great?

If you haven't changed then nothing has changed.

You used the word slump, so you know what it is already.

You know your closing ratio, if it's 25% then you know that after every 3rd person you talk to the 4th is a sale. So if you have talked to 8 people without a sale you are due to close the next 2. Every person you talk to and don't make the sale the odds grow higher that the next person will be a sale.

You know its a numbers game, just keep doing what you were doing and you'll be fine.
was the home under 20 sq? was it a complete tear off? were you using azek trim boards?
i have encountered this alot as of late and you simply have to walk away. windows is a different story because the quality varies so much from one manufacturer to the next.
as someone else mentioned, "we do a siding install correctly, we don't do it for beer money".
Are you bidding against the same guys you were bidding against before? Are you getting in front of the same kind of customer as before? Maybe your customer mix it changing to a lower grade customer. Also, its not really the time of year when folks open their wallet home improvement, IMO.
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.
See less See more
  • Like
Reactions: 1
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.
See less See more
We have found the same trend here in NY. My competition has decided that profit is a bad word and dropped their prices dramatically. Hold your ground and sell the difference. Once they get busy this spring their prices will go back up. In the mean time prepare for lower closing rates
Get used to it, this year I have been underbid by as much as 8k on a 15k bath. Some see the light and wonder how they can do it so low some are blinded like its christmas for them. I still sell at my price just takes more selling and comparing apples to apples. Ask to see the other bid an dmake comparisons on what is included and what is not.
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.
See less See more
Get used to it, this year I have been underbid by as much as 8k on a 15k bath. Some see the light and wonder how they can do it so low some are blinded like its christmas for them. I still sell at my price just takes more selling and comparing apples to apples. Ask to see the other bid an dmake comparisons on what is included and what is not.
You should try avoiding an apples to apples comparison, you should show them an apples to oranges comparison.

Your sales methodology should be designed to make them feel comfortable about working with you.

A recent prospect said to me “I want to make sure I’m comparing apples to apples”.

I replied “I’m not selling apples. This isn’t about materials, anyone can buy materials. You can even buy them your self. I’m in the service business and I help my customers to get the quality of service that they deserve.”

By the way I got the job.
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.
See less See more
  • Like
Reactions: 2
1 - 11 of 11 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.