A contractor in Hawaii sent in a note asking about a few sales issues:
One problem I am running into is getting commitments from potential customers. Do I press on with a design agreement, some are kitchen and bath improvements not a whole lot of designing there. What would be your approach.
Also I have lots of people looking to see what things cost to do, they are wondering how much money they might need to borrow for their renovation/build. I live here in Hawaii, where cost of living is high, well, pretty much everything is high. So I think they are little hesitant on moving forward, cost is almost always a high factor. Also, there are so many others here that will low bid a job.
What am I doing wrong or what am I not doing?
While a design agreement is my first choice in most sales situations, if design isn’t needed you might consider using a letter of intent to get a commitment. A letter of intent simply secures a spot on your production calendar. The client is committing to having you build their project, and you’re committing to holding a spot in your schedule for their job. We include two sample letters of intent in our Profitable Sales book. This is a paragraph from one of them:
We will start on your project within 15 days of permit issuance subject to contract and weather conditions, provided all selections have been made and presented to {CONTRACTOR NAME}. A list of required selections for your project is attached.
Remember that you’re in business to secure work for your company and that’s done when you get a signature on the dotted line and money changes hands. You don’t really have a commitment until money has changed hands.
Price is always an issue, regardless of where you live. I hear that song almost daily. Too many believe that contractors should work for less than minimum wage while doing top quality work to improve one of a homeowner’s most valued assets.
Not everyone believes that, however, and they know that they have to pay a reasonable price for the work they want. So, if you’re hearing consistently that your price is too high, and you’re following the procedure we talk about here and in Profitable Sales, A Contractor’s Guide, you might be marketing to the wrong people.
You can’t control other contractors and their low pricing scams. Fussing about them is a waste of time. They’ve probably been around since cavemen started hiring other cavemen to do their drawings, and they’ll be around long after you and I are gone. They want to give their work away and that’s their privilege. You need to focus on your marketing, and continually practice your sales skills.
Eliminating clients who only want a low price and focusing on the folks who are ready to buy is how you protect your time and knowledge, and provide for yourself and your family. Remember, you’re not in business to drive around and give out bids. You’re in business to provide a service and make a profit doing it.