Price resistance is a daily occurrence for trade contractors.
How
much to charge for your services is the focal point of any trade business.
Charge too much, and you won’t get the job; charge too little, and you’ll go
broke. Then you have to face the facts that every job is different, estimating
is an inexact science, and customers always can get a bid that’s cheaper if
they shop around. Many customers subscribe to the old wives’ tale that they are
best served by getting three quotes and taking the one in the middle. In most
cases, the top bidder is likely to be the only one of the bunch who has built
enough into his quote to make a profit.
Consequently, price resistance is a daily occurrence for people in your
business. The temptation is great to lower your price in order to get the work,
but, in the long run, that’s a path to bankruptcy. Instead, it’s essential to
convince the customer that the price you quote is fair and of better value than
the customer can get from competitors offering a lower price.
Top sales professionals will tell you that every price objection amounts to a
failure to sufficiently sell your value. That’s true as far as it goes, but
what you need to focus on are some specific strategies to help you hold the
line on what you need to charge in order to prosper. Here are some tips that
I’ve picked up over the years from a varity of successful trade
contractors.
Professionalism counts.You’ll always have a strong case for your higher price
if you convey a better impression than the competitors do. This means no
“ballpark figure” numbers on hand-scrawled pieces of paper. Would you buy a
brand-new rig from a deal-er whose paperwork amounted to a legal pad and barely
legible handwriting? Use preprinted business forms to record measurements, data
and notes. Put it inside a presentation folder that includes technical
literature, a company brochure, copies of your license and insurance
information, product cut sheets and anything else the customer might find
useful. Especially include testimonials from satisfied customers. Throw in some
notepads, refrigerator magnets and some other promo items with your logo and
contact information. Professionalism also means making an appointment for the
bid presentation and – especially – showing up on time, dressed in a
presentable manner. This doesn’t necessarily mean wearing a suit and tie. It
does mean changing out of soiled work clothes. A monogrammed shirt with your
company insignia would be fine.
Sell your expertise. Draw attention to special qualifications you or anyone
else in your company may have. These could include academic credentials and
certifications, trade association leadership positions, articles written about
you or your company, articles you may have written for trade magazines and so
on. Think of everything you’ve accomplished that even remotely relates to your
business, and lay it on the line. Add up the combined years of experience of
everyone in your company, so you can say, “We have been doing this for more
than a half century” or whatever the timeline might be.
Make sure all buyer influences are present.With married couples, make sure
both parties are present during your presentation. A husband might think he’s
the one making the decision, but if the wife expresses dismay at your bid, your
hard work in selling the job could easily go down the drain. With commercial
work, take time to talk to all decision makers. The project manager may be on
your side, but the CEO could overrule his recommendation, so try to make a
presentation to the CEO as well.
Make sure comparisons are apples-to-apples.Where competing bids are involved,
ask to see how the competitors’ quotes are presented. Go through them in detail
and point out areas where your bid includes things theirs do not. Educate the
customer about things to look for regarding scope of work, qualifications to look
for in choosing a contractor, why certain products are better than others, and
what distinguishes good workmanship from poor. Talk about the potential
consequences of things going wrong, and the protections you offer that others
may not.
Avoid disparaging competitors.It’s OK to differentiate your bid from theirs
and point out things you do that they don’t, but take the high road. Avoid
badmouthing competitors. Focus on the positives about your company rather than
their negatives. Various studies have shown that people react negatively to
negativism. Aim to conduct yourself in a more professional manner than the
other bidders.
Encourage questions. Keep asking would-be customers things like, “Is there
anything more you’d like to know about this project?” “What more can I tell you
that would be helpful?” “Do you have any questions?” This demonstrates concern
for them, and also helps to clarify misunderstandings before they arise.
Provide options. Top salespeople always sell up by selling down. They know that
presenting options in a “best-better-good” order works better than starting
“good-better-best.” That’s because consumer psychology is such that people will
tend to get fixated on the price of the “good” option and tune out everything
that’s more expensive. But if you first entice them by explaining the features
and benefits of the best option, they will feel a sense of loss when you
explain what they have to give up by going down in price. Nonetheless, if they
get sticker shock at your “best” offer, the option still exists for them to
scale down to a more comfortable price range.
Negotiate warranties, schedules, etc. If the customer proves to be a tough
price negotiator, think of things you can give up without much pain instead of
lowering your price. Maybe it’s extending the workmanship warranty beyond the
standard length, or making some scheduling concession, or extending the payment
period.
Guarantee satisfaction. This takes guts, and you better be really good at what
you do, but a “satisfaction guaranteed” sales pitch often does the trick. Use
appropriate disclaimers, but simply tell the customer that you’ll assure the
job gets done to their complete satisfaction. (Some businesses offer money-back
guarantees, but that’s a little too risky with high-volume jobs.) Put it in
writing, because verbal guarantees too often get remembered differently by
buyer and seller.
ND