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Discussion Starter · #1 ·
YOUR PRICE IS TOO HIGH!
Whats your response?

Can you guess what a customer said to me today? LOL ;)
 

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I'm not into high-pressure sales, so I usually go for the subtle approach. Go over the bid and item at a time so they know what they are getting for their money. Then if or when they say they will be getting other bids, tell them fine, and hand them a estimate comparison form. Tell them to make sure they are comparing apples-to-apples when looking at all the other prices. This way I just set the standard for every other contractor in the door behind me. Always return call pronto, I want to be the first guy in the house for an estimate if possible.
 

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Nathan said:
YOUR PRICE IS TOO HIGH!
Whats your response?

Can you guess what a customer said to me today? LOL ;)
Nathan,
Price is never a question when you diffuse them with " Do you have a set or specific budget" before the walk through begins. " If their price was high, they had a budget. Customers have a set price based on experience or another comparison estimate. Ask to do a comparison of the previous estimates so you can explain the resasons why your quote is possibly higher...So many factors you may have seen, the others did not nor figure on....

BTW....When we going to do lunch....
 

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Discussion Starter · #4 ·
I can do lunch this week or next... I'll PM you in a minute.

My estimate was being based on the last contractors estimate BTW. I have a few ways of breaking down the walls myself but I always learn a ton from asking quesitons like this on these boards. So much good knowledge out there!
 

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I tell them my price is going to be in the middle before I even tell them my price. I also tell them why my price is goign to be higher so when they see the price they already know why. If they say it's too high I repeat the same thing I already told them.

"Mr & Mrs. Home owner, my price is usually in the middle of the spectrum, as I already promised. If you think my price is the highest around why don't you call Sears or Home Depot. I'm sure after you speak with them you will agree my price is very reasonable.

We focus on quality and service, and these are two things you have to pay for. If I cut corners on my estimate you can bet I'd have to cut corners on the install. Don't you want your job installed properly? I bet you want to have it done and forget about it. Well our workmen are trained and certified and our warranty is tight and secure."

That's just one response. Here is another:

"Sir. I know most guys go into a presentation with an inflated estimate. They do this so that if you ask for a discount they can give you one, but there is no discount. There never was! They just inflated their estimate.

We, on the other hand, believe in fair pricing. This doesn't mean cheapest it means fair. I give my best price every time. I don't want to play games, and I don't think you do either.

I don't want to be the cheapest roofer, I want to be the best roofer. So if you want the best roofer installing your new roof just sign right here."
 

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Personally I don't mind hearing "Your price is too high", it means you have a "buyer" in front of you. Only people who are very close to purchasing your service make statements like that, people way out in the process don't, they aren't even thinking that far down the road yet.

Being an old hard core sales dog, when I hear that phrase my response is going to acknowledge their statement and concerns and use this opportunity to close the deal.

"Yes, I can understand that my price may seem high to you, after all, money doesn't grow on trees. Let me ask you, exactly how too high is it? What number were you thinking?"

If you shut up and just listen, a couple of wonderful things can happen at this point. The customer will usually vomit tremendous amounts of information to you, the less you say, the more he will tell you.

Plus you can never properly negotiate without knowing what the numbers are. You might hear "You're too high" and instantly think you are off by $3000. But the customer might be thinking only $600. Maybe all you are going to have to do is give up $300 to make a sale you would have walked away from and never knew you missed by such a small margin.

Only by asking will you ever find out, and that is what I would call the road map to the sale. Letting the customer tell you what you need to do to make the deal is so much easier then doing all the talking and never knowing if you missed the sale by a few dollars or a few words.

This is also a moment that most people don't realize is one of the best opportunities you will ever have to close the sale.

When your estimate says $5000 and he tells you he was thinking $4500. This is the golden moment when you should always say: "If I could do it for $4500 would we have a deal right now?" Even if you have no intention of doing it at that price, what you have done is gotten past all the crap and gotten down to the heart of the deal. If he says yes at $4500 he would sign the contract right now you then are more than 1/2 way home. The customer has been moved a tremendous distance mentally in the transaction. You took him from his mindset of "I'm getting a bunch of estimates and then I will decide what I want to do" to "This will be a deal right here and now if we can agree on the price." - that is a tremendous closing tool that will make you a lot of money.

As far as the process goes, to be honest with you, when you are giving an estimate, you should have already built all the value before you ever present them the numbers. After presenting the numbers is it too late to then try to build value, at that point you are just trying to justify your price and it's a very uphill battle at that point.

By the time you present the numbers and the customer tells you your price is too high, the only goal you should have at that point is finding out what is the right price and seeing what can be done to make the deal. Get that number out on the table and then talk it out to see if you are talking apples to apples, a lot of time it is apples to oranges, but the second thing you need to now do is understand does the customer want an apple or an orange, you might be trying to sell him oranges and he is trying to buy apples. At this time you can often get rid of something you were including because you assumed you had to, that alone could be enough to make the deal.
 

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Them: "Your price is too high."

Me: "Well, okay, thanks for your time, here's my proposal. When you compare these to any others you get, compare my details to theirs. Have a nice day and thank you for your time. Please call if you have any questions."

I don't play around with price shoppers. They know on our first conversation that I'm not the lowest guy in town. If they've been referred to me, they already know that before they call. Part of my sell is the fact that I'm not a discount carpet guy. I sell top quality flooring installations. Not rock-bottom prices. I never ask them what number they were thinking. I never ask for a chance to see their other quotes. If they ask me if I match estimates I tell them upfront, "no"

Don
 

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ProWallGuy said:
I expect to be rolling through Colorado by next spring, I need to stop in and buy you a cold one.
Sounds like a plan. :Thumbs:

I'm in the process of canabalizing your contractor comparison forms you had sent me right now actually!
 

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Either way, it's lose lose
Not really Grump, let me explain.

A customer walks into my store and asks for new carpet, so I go out and measure and estimate for a nice Karastan carpet like she requested. After giving her the bid, she says "your price is sooo high!". I take the time to explain why the price is high (quality of materials, warranty, ect...) and she doesn't seem to get it or care. Well if I walk away, then I miss out because I am trying to sell her a higher quality then she wants.
So I ask " what budget do you have set for this part of the remodel?"
It does not open things up for negotiation at all. All it does is gives me a number she was expecting. So I find her a carpet that will fit into the budget and explain that even if the carpet is not a Karastan, it is still as good or better quality than what any other store can provide within your budget.
Now my total invoice will be a bit smaller, but my margins will be the same, or sometimes higher depending.
So you see, I do not negotiate to lower prices, I just match quality of materials with budget.
But I NEVER lower install prices of course. No discount installers here.
What this does is help me have a higher closing ratio because I am closing higher AND mid to low budget clients.

Now that being said, if you work only on labor and do not sell the goods, then this info does not apply.
 

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Yes explain why your price is high, I agree. Maybe substitue materials to lower that price. Don't give without a take. This means don't give a lower price without taking something away from them to compensate that lower price.

I may give up $50 bucks on a $5000 job just to appease the customer but that's about it.
 

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Excellent information here - the big gap I see here is the difference between a "discount" to get the job and a value engineering of materials. I don't agree with giving discounts but do agree with value engineering to a budget.
If I know what the budget is ahead of time - I will provide a as specified/drawn estimate and then give alternates to get to their budget. Then the negotiation is more geared towards "we can substitute this for that and get you to your budget". I don't compromise my profit while still providing due diligence to the budget of the client and giving them options - maybe they have to have this but could diminish that.
 

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Grumpy said:
What number are you thinking? opens up the price to negotiation. Why negotiate price?
Talking about price does not open up Pandora's box and send you down a path you cannot step off of. You are always free to end up right back where you started - which is not changing your estimate and just hoping they call you.

Everybody in this business considers themselves a salesperson, however so few of them sell. A sales presentation about how great you and your company is, your products and your quality is the presentation, but it is only part of the sales process, the other part of it is closing. Going out and giving great presentations and then ending with take it or leave it estimates is not selling, you're just an estimater throwing enough stuff against the wall, hoping something will stick. Negotiating and closing sales is selling, it is the finishing touch, it is the 1% more effort that nets you 30% more results.

If you want to sell, never be afraid to ask the customer what it will take to earn their business. Never be afraid to ask a customer if you can do what they want would they buy it today. It is such a powerful selling techique that it should be illegal. Customers want to be sold, they want to deal with somebody who believes they have a product so good for them that they are willing to do what it takes to get it into their hands.

A lot of people don't want to talk price because they are scared what will happen, but guess what, if you are a take it or leave it estimater all you are doing is talking price. You have nowhere else to go with what you are doing. You leave them an estimate and hope you are chosen. What makes them choose you? If your price was too high and they don't end up calling you to do the job, guess what? You lost the deal on price! It all comes down to price in the end anyways, don't be afraid to pull it right out in the open and see if there is really something more to the deal then just price. Only by discussing it and getting a commitment can you find out how important it really is.

I know that if you do this over and over again, your profits will actually go up and not down. You will get busier and busier, your advertising costs will go down, your closing ratio will go up, and less and less people will say to you "Your price is too high". You will get into your customers heads, after awhile you will know what your customers are going to say before they do. It's crazy, but it works.
 

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Grumpy said:
I may give up $50 bucks on a $5000 job just to appease the customer but that's about it.
Grumpy - From a pure financial standpoint even if your per customer aquisition cost is less than 50 bucks you might want to reconsider that statement.

In the simplest way to look at it if your per customer aquisition cost is $200 per customer, you still have another $150 to negotiate with, since it is going to cost you another $200 to stand in front of your next customer.
 

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Mike I don't want to negotiate and I don't like working for peope who do like to negotiate. My time is better spent with someone that might try to negotiate but doesn't need that feeling of winning to feel good about himself. I have found through my 4+ years in construction sales that people who negotiate do it chronicallya nd tend to negotiate throughout the entire construction process and even at final invoice. I can not and will not tolerate this.

I will be honest. I have a very hard time controlling my temper when a customer asks for a discount after I have submitted an invoice for final payment. Infact if you want to piss me off, this is a sure fire way of doing it.

What's the 80/20 rule? 80% of your time will be spent on jobs that yield 20% of your profit. If I spend all my time hand holding then my service to my other customers will suffer.

I just really really don't want to work for someone who wants the lowest possible price. I prefer to work for the kind of person who preferrs value and quality of cheapest price. Value doesn't mean cheapest upfront investment. It means cheapest investment over a long period of time.
 

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One more thing. You will be suprised the reacion of your customers when you shut them down like I do. "I'm sorry, we privide out best price the first time."

If they are asking you for a discount, that means they have already decided to use you. Your just giving profit away for no good reason when you are at that point.

Will you lose some customers by not negotiating? Yes. But I guarantee you won't lose as many as you think you will lose. I thought the same thing once and I haven't looked back since I learned "selling isn't lowering your price." If you've learned nothing else from me through my 1600+ posts that should be the one thing.
 

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I have a very hard time controlling my temper when a customer asks for a discount after I have submitted an invoice for final payment
Asking for a discount AFTER the job is done would make me mad too!

I think what we are talking about, is not lower your price, but lowering quality of MATERIALS to match their budget expectations. And I agree with you completely that you should not discount high end goods.
Unless your having a sale up front.

Discounting at the drop of a hat creates distrust in your pricing right off the get go.
 

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Grumpy-


When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much the old man had learned in seven years.

- Mark Twain
 
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