As a contractor do you ever struggle with trying to explain to a prospective customer the reasoning behind the pricing of a project?
Last week in the “just ask Vicki” series, a kitchen and bath remodeler (Connor) asked me this question on the subject:
“Would you recommend building our bids in terms of the “product” that the customer is buying (e.g., Bathroom Remodel, Kitchen Remodel) – or based on the actual “services” offered (e.g., demo, tiling, painting)?”
I love Connor’s question, and in the rest of his question, he actually answered his own question – in part, but there are two distinctions that as you read on, can help him (and you) find an easier path in the sales process. Here is what Connor adds to his question:
“The pros of doing it based on the product, is that it aligns with how the customer often sees it. They want to know how much a bathroom remodel / kitchen remodel would cost.
The pros of doing it based on the service, is that it would allow us to better manage our costs and pricing. This way, we could track our margin per activity, etc.”
Connor is spot on in his thinking – in part. The part that is spot on is “aligns with how the customer often sees it.” Absolutely! In the sale process, one of your greatest assets is when you can have the customer truly feel like you understand their concerns and can communicate at the level of how they are thinking about what they want to do.
The part I don’t necessarily agree with is where Connor says, “They want to know how much a bathroom or kitchen remodel would cost.” Well, yes, and no. Of course, they want to know the cost, but this is where education of the prospect is crucial. It is in the educating the homeowner about what is involved in doing the remodel, and where you now have the amazing and wonderful opportunity to build “know, like, and trust” in the sales process.
When you’ve empowered someone with clarity (educating them about what is included and how the process will look, what they can expect, and what you’ll be doing for them), you give them more confidence to make a more informed decision. And when they are more confident, they’ll make better decisions. AND they will trust you more.
This is a fine ‘nuance’ in the sales process that many people miss. The homeowner, when they feel a lack of clarity and confidence is not always able to articulate that nagging feeling of just not feeling comfortable and will often tell you it’s the price that is the reason they didn’t choose you, when in fact, it is often something else altogether. It is often a lack of trust – in themselves, and sometimes, you.
This is a regrettable unintended consequence of not spending the time with a prospect to educate them well in what to expect and how to make informed decisions. Spending this time at the front end not only makes you have more “know, like and trust” factor with a prospect, it also makes your job easier for you to provide the ‘right’ solution for a customer. That’s not to say you should give away a ton of your time for free, but it is to say that a good sales process lets you have more control in driving a positive outcome.
As for Connor’s comment about tracking it by phase or task of working makes it easier to track and manage costs is also completely true. One does not preclude the other from happening though. In fact, when you have a good set of cost codes and consistently track job costs in production, it doesn’t matter if it’s the bathroom or the kitchen – separating these out can easily be achieved by using job phases or sub-jobs, depending on your software. A longer topic to address for sure.
If you want to increase your close rate and have conversations about money with prospects go more smoothly, then you need a good sale process – one that emphasizes building the “know, like, and trust” factor with a prospect and focuses on education. If you don’t currently have a great written sale process, I highly encourage you to institute one. You can get my “Sales Process Toolkit” for FREE here.
Thanks for the questions, Connor – hope this helps!