Too many contractors don’t charge enough for their work because they believe the only way they’ll make the sale is by having the lowest price, or at least a low price. In Pricing Jobs Right, I explained that price isn’t the number one concern with most of your clients.
A survey by the NAHB (National Association of Home Builders) in the late 1970’s found that price was #7 on the list of priorities when clients were purchasing either a new home or remodeling services. Look at the top ten:
- Company Reputation
- Personal or Professional Recommendation
- Company Professionalism
- Company Insured, Bonded
- Company Offered Warranty / Guarantee
- Design & Ideas
- Price
- Sales Person or Representative
- Saw Similar Jobs Completed
- Expertise in Job Type
I know what you’re going to say. “Stone, that was 1970! Things are different now!” Guess again.
In a 2013 survey done by Houzz (www.houzz.com), over 100,000 respondents answered this question: “When choosing a professional to work on remodeling or decorating in your home, on a scale of 1 to 5, where 5 is very important, how important are each of the following?” Here’s what they considered very important:
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| Criteria | % Rating “Very Important” |
| Good reviews and recommendations | 81% |
| Expert in their field | 70% |
| Personality I can work with | 67% |
| Completed projects like mine | 59% |
| Lowest cost option | 8% |
Getting the lowest cost option is very important to 8% of the respondents. That’s the 8% you don’t want as clients. When you realize a potential client is in that 8%, excuse yourself and let your competition have them. Your goal is to work with the remaining 92%.
(The Houzz survey, which by the way is very informative, is available here – Houzz Report)
Your potential clients have three basic fears:
- Will you do the job they want done?
- Will you do the job in a timely manner?
and - Will you do the job at a fair price?
Both surveys confirm that those fears are what matters to them. Your job, if you want to make the sale, is to address those fears so they feel safe purchasing from you.
How do you show a potential client that you’ll do the job they want? By asking questions about the job. The more questions you ask, the more they’ll see that you want to know what they want done. Because you want to build their job the way they want it. That’s when trust begins. When you ask enough questions, it will suddenly dawn on them that you’re interested, you’re paying attention to what they say and you’re giving them feedback that says, “Yes, we can build that job for you.”
Asking questions isn’t telling them how much you know. It’s finding out what’s important to them.
Next you ask about their start or completion date. Properly worded, your potential clients will answer your questions and zero in on the start or completion date. This helps remove their fear that you won’t get the job done in a timely manner. When you ask for a date and they give it, you confirm it and tell them that you can or can’t meet that date. If you can’t meet that date, here are some alternatives. You’re listening and you’re communicating. You’re addressing their fear and gaining their trust.
Fear #3, will they do my job at a fair price? Not the cheapest price, a fair price. A fair price is the price that allows you to pay all your job costs, all your overhead expenses, and make a reasonable profit. That’s fair – you’re compensated for all your work, without gouging.
You can alleviate the last fear by helping them set the budget for their job. They don’t have any more idea than you do what the job will cost, but they know to the penny what they want to spend. Your job is to ask enough questions and give them enough information that between the two of you, you get the budget set for the job. Using the Cost vs. Value report that is published by Remodeling Magazine each year is always a big help in this endeavor.
What most potential clients don’t understand is that they determine the price of the job by the design they choose and the selections they make. It’s your job to educate them.
There’s a lot more to this than what I’m addressing in this brief article. Chapters 6 and 7 of the book, Profitable Sales; A Contractor’s Guide were devoted to understanding your client’s three fears, and the four questions you should ask to address those fears.
Price isn’t the number one concern with most of your clients. It shouldn’t be yours, either. If you cut your prices in the belief that it’s the most important part of your sales presentation, you’ll end up going broke. And it’s a painful journey.
You can drive around and give out bids in the hope that you’ll get lucky by being the lowest bidder and get the job. Or, you can get busy and polish up your sales skills. Learn how to make a good presentation. Find out what matters to your clients, and show them that you are ready to help them maintain or improve their largest investment. Read, study and learn, then put it in practice on your sales calls. That’s how the Good Guys Win.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.