by Michael Stone
Why do your customers tell you "your price is too high"?
Do they really know one way or the other if your price is too high? Consider this. If your customers did in fact know that your price is or was too high on any given price quotation that you have given them, you and your company would not be necessary. They would do the work themselves.
"Your price is too high" is a tired old line that your customers have been trained to use to get you, the contractor, to lower the sales price of your work. They have been told by the media, their neighbors, someone at work, their family, whoever that if they tell you "your price is too high", you will, in all likelihood, change the quotation to some lower number. You will do this in hopes of getting their job. That is exactly what most "order takers" will do. The good salesperson knows better and doesn't lower their price, unless the customer changes the job.
"Your price is too high" (and that statement can come in a number of different forms) simply means that you have not done your job as a salesperson. Plain and simple, you have been lazy and have missed some very important steps of the sale.
You have not pinned down the budget to the point that you know what they want and are willing to spend. We outline this procedure in our Profitable Sales video, our book, Profitable Sales, A Contractor's Guide, and also in our book Markup & Profit; A Contractor's Guide. To get a "Yes" when asking for the order, you must get the four basic questions answered.
Those four questions are:
- What do you want to do?
- When do you want to do it?
- Who will make the buying decision?
- What does that person(s) want to spend?
If you get the answer to those four questions, you will get to "yes" much quicker.
Sticking to and getting the answers to those four questions will help you determine if your customer is in fact qualified to buy from you. You will also eliminate most of the so-called "sales objections".
Knowing the answer to those questions will take your sales ratio from 1 in 5 to 1 in 3 very quickly, without lowering your price.
Learn the technique, ask the questions, get the answers and watch not only your sales increase, but your profits increase as well.
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Gold, Researcher replied on 05/17/10:
What if the price quoted was acceptable and the buyer said the price was too high? My experience suggests that 60% of the sellers are willing to accept 50% less.
kris replied on 09/13/10:
i always give 2 prices there is the take it price or the leave it price and have been pretty successful so far
Phil Vanderloo replied on 06/03/11:
"My experience suggests that 60% of the sellers are willing to accept 50% less."
You made my weekend. Always up for a good belly laugh.
Nathan Deneault replied on 06/04/11:
Obviously the person who commented on taking a 50% discount is full of it.
The cost of doing business keeps going up. How in the world can a company take 50% off of the total amount? Taking 5% off hurts like heck!
Oh well that person can always dream.
Dude replied on 06/04/11:
"My experience suggests that 60% of the sellers are willing to accept 50% less"
That's the dumbest thing I ever heard.
Sellers of what, crack?
JP Ware replied on 06/04/11:
Researcher (it would be nice if you used a name it would make your comment more credible). I would be interested to see the supporting data for your comment, further to look at the statistics of the "60%ers" who are still in business within, 6mos, 12 mos, 2 years and 5 years after accepting 50% less for their work. My bet is if the "60%ers" are doing an accurate bid that is reflecting their true costs combined with a properly calculated margin to cover their overhead and required profit, you will find that less than 10% of them are still in business after 5 years. Businesses need to make money to survive, the Internet mentality of Amazon and the likes operating at little or negative profit have fooled the buying public into thinking this NET LOSS business practice works and that it applies to the real world brick and mortar businesses that are the backbone of the economy.
Eric replied on 06/05/11:
My experience is that 87.3% of statistics are made up.
The above statistic has a 4.65% margin of error.
No real contractor is going to reduce his price at all.
If you want a lower price, reduce the scope of work or change your product selections.
Troy Bengford replied on 01/20/13:
One of the greatest pieces of advice: Give ONE price, THE price. When asked "What is the price?" reply EXACTLY: "THE price is $x"
If you reply "I am asking..." or "our regular price is..." or any thing else you are INVITING them to request a discount. ALWAYS: "THE PRICE IS..."