Whether your company is facing increased material costs, increased wage growth pressures or a flood of new demand, 2019 is the year you will need to adjust your pricing strategy.
When it comes to talking to customers about prices, many contractors are overcome by fear.
Get over it, because your selling price has the biggest impact to the bottom line.
When you think of every buyer as a “price shopper”, you tend to set your prices too low for the health of your company.
Industry consultant Jeff Carowitz works with contractors on their pricing strategies. Here are a five of his tips for presenting prices during your sales process:
- Just say it. Words like “suggested”, “list”, “best” and “asking” before the word “price” often send the wrong signal. They signal that the price quoted is the starting point for further negotiation. It is better to present your price as a simple matter-of-fact: “The price is $2,000” or “Those are $47.00 each”. You don’t add descriptive terms when you give someone your phone number (your “suggested” phone number?!). Don’t add them when you give a price.
- Avoid setting up objections and counter-offers. Skip wind-up statements like, “I know you’ve been our customer for many years…” “I want to earn your business on this project.” “Maybe we can work something out…” It may seem like you’re trying to acknowledge the customer’s importance, but these cushioning statements just give an easy opening to ask for a discount.
- Never, ever, ever say. “Am I in the ballpark?” “What price do I need to be at?” “Would you be willing…” Groveling statements like this are the verbal equivalent of a kick-me sign.
- Stop treating everyone like a price buyer. In the typical market, 30% of the buyers have price at the top of their mind. The other 70% are significantly more interested in delivery, timing, convenience, stability, etc. Price shoppers are the minority, not the majority. Note: many value buyers will say they buy on price just to see if you’ll flinch and offer a discount.
- Price by itself seldom gets customers to switch. Most changes in habits come from supplier service failures. Lack of reliability or quality in service delivery is the most frequent driver of suppler changes. A customer relies on a supplier for a long time, and then a change in policy or personnel causes a loss of predictability in the relationship. Service failures are powerful because they can have wide-reaching inconvenience for the customer. If you want to win accounts, credibly present the value you can provide. That’s what buyers want – and it’s what keeps them coming back.