February 11, 2018 at 9:16 am #107736
This is oldie but goodie from 2002. Lot’s of good stuff here!
OLE WILLIE –
We want to use your company BUT…
How often do you get this? Had another one yesterday say we wan to use your company BUT XXXX roofing gave us a cheaper quote. If you can match it you can have the job. Unfortunately we are in a drought situation and its dog eat dog. I hate doing this and DON’T do it when I have even an average amount of work. But damn-it I’m gonna have to do it this time! GRRRR! But glad to have the job at the same time!
MIKE H – Willie, “Mr. Jones, if contractor XXXX is $1,000 cheaper than me, why in the world would you want to use my company?”
Mr. Jones – “Well, Willie, I’ve heard you do a good job.
Willie – “Mr. Jones, I understand your dilemma. I think you need to evaluate in your own mind just how much a leakfree roof is worth. If it’s not worth much, then you’d be a fool to use my company, but if you value those things, it seems like a no-brainer decision to me.”
Or something along those lines.
OLE WILLIE –
Yeah that would be my response if I had some work. BUT it is just a couple hundred dollars and we NEED the job. Still a good profit in it either way. We need the money so were not in a position to play bluff calling poker. The pots too big and our chips are too low. We can’t afford to lose this one. So we have to play it tight. Great advice! I tell the customer that and he says ok then and hires roofer x and it just cost me $4,000! Trying to squabble over 400.
RRD – In the end ya gotta do what ya gotta do. Paying the rent/mortgage putting food on the table is job One. Hope things pick up for you.
Don’t lose a dollar grabbing for a penny
MIKE H –
Willie, If you ask the right questions, you won’t lose the sale, but you will find out what’s important to him. If price is all that matters, then go ahead and drop it, but if he sees value in the things you offer, you just gave away 400 bucks for no reason. I never said walk away. My scenario put the ball in his court, the moment he opens his mouth he starts to tell you what’s important to him. $400 only matters when all other things are equal.
OLE WILLIE – Hee, Hee, Yeah these things I know but the fact that they start asking me to cut my price right off jump street tells me what’s important to them. Saving a few hundred! I was just wondering how often does every one else get this type thing. I have told many NO when asked this. I have lost some jobs because of it. But several of them also paid the higher price that I stuck with. It’s my poor position that is making me decide to just drop the measly $400 and not risk losing this one during this drought and slow year. This is what the drought does. Drive down the prices.
TOM HAY –
Willie, you ain’t gotta give the farm away. The guy says he wants to use you BUT. Hit him back with ‘I would like to do your job BUT I have to come out with some profit’. ‘Tell you what Sir, split the $400.00 down the middle, press hard there’s three copies and lets put this thing to rest’. You have never said no, just thrown another option. I always liked the “Whelp, if your short on money and want me to do it, I will carry the $400.00 for 6 months, no interest. You could put yourself in a trap where HomeOwner tells RooferX you met his price, can they do better?
OLE WILLIE –
Yeah Tom that’s true but OLE Willie won’t be playing that game past stage 1. If the customer came back to me again saying RooferX dropped another whatever I would say just call me when it leaks and I’ll fix it for 10 grand. I know some customer do that. A few anyway. Usually other contractors but not always. Old Timers will do it also sometimes. They’ve been around long enough to know they can do this at times. Like I say if I had a lot of work or if it was more of a drop I would not do it.
TOM HAY – Sooooooooooo, ask to split the $400.00 down the middle. Some people just like to haggle and feel the won something. You worried he might say no and you will be forced to do it for what you already decided you would take?
OLE WILLIE – Yes I was afraid to lose this one. Can’t afford to lose it. If it’s not worth risking over 400 bucks then it’s definitely not worth risking over 200 bucks! I figured I better take the job before Jack leg John and his best buddy Ron come along and offer to do it for a case of Milwaukee’s best and a carton of smokes.
MIKE H – Don’t take it that I’ve never cut a price, but before I do, I make sure that the other guy has promised to give everything I will. I start talking about details, particularly since I know the intricacies of most of my local competitors. If all things are equal, which I honestly cannot remember them ever being so, and price is still the factor, sometimes I cut it if I need it, most times I don’t. Sometimes I bid a job really cheap just because I know XXX is likely to get the job anyway. Most times I just bid my way, my price, my product, and if they don’t want it, so be it.
If I’m really low on work, which I have been twice this year, I’ll get aggressive by calling customers with projects that are outstanding. I offer a discount if they make a decision in a very short window, usually just a couple days, or I’ll offer them some extended payment terms. If they come back with a negotiation to drop my offer even more, the offer is over, sorry, back to original price and payment terms, and I call the next one to see if they’ll bite.
It isn’t fun being low on work, and I can get creative, but I really can’t remember the last time I took a “If you can do it for bob’s price, it’s yours” but I’m sure it’s happened. Hope the job goes well for you.
The only time that a strategy of cutting price or meeting price is when you ABSOLUTELY have no work in the old pipeline and the mortgage is due at the door. That is the only time that our family has ever done so. This has happened only twice in the fourteen years of having my business doors open.
It is actually quite a compliment that they want you to do the work even though the other company has the lower bid. They want quality and bargain basement prices at the same time. The old “cake & eat it too.” I usually ask to see the contract for the lower bid. More often than not there isn’t one. Or the lower bid is for less than what I am bidding. I always try to negotiate getting the job because if they didn’t want me we wouldn’t be talking. So they want me, that is good, now how can I do the work for a good price? Usually I can make a deal.
“We don’t try to be the cheapest Ma’am”. “It cost money to be the best. Sure their a little cheaper, but did you know 8 out of 10 roofing companies that are in the yellow pages right now will be out of business within 5 years?” “I assure you we’ll be around to honor our warranty, how about them?” “Ma’am, I offer a professional roofing system done right, on time and I promise you we will stand by our warranty. I don’t make the prices but good quality craftsmanship costs a little more sometimes. We pride ourselves on being the best and our reputation speaks for itself. So if you want to save a few bucks I’ll understand. But I have no authority to alter or adjust this price any further. So here’s my card and I hope you will consider further business with my company should anything go wrong with that roofing company or their roof they will install. Good luck and have a great day Ma’am. Oh and if you reconsider, I’ll talk to the boss and see if he can negotiate the price a little. I’m sure he won’t go that low, but I’ll see what I can do. (Smile) Good day Ma’am!”
OLE WILLIE –
When I have work not only will I not drop the price but I will raise it instead! I laugh when I run into one of our competitors and he tells me he has seen our bids and knows what we charge. Our prices are up and down like a roller coaster depending on circumstances
If I think they’re real I’ll go see them and look at the bid from the other company. Nine times out of ten we’re installing twice the roof as the competition, for virtually the same price. Case in point, we called a guy we had bid and he said he went with XYZ company, signed a contract and everything. When he was asked questions like what quality of skylights were offered, thickness of insulation board used, etc. he said he would call the company and call us back. Said the reason he went with them was due to their $1,000 discount. Well he called back, twice, and then asked us to come back out. First I asked him the other company’s price and he told me they were HIGHER than our price! I said, well Mr. Jones I’ll do your roof for their price, how’s that? He said fine, come on out. It just goes to show you how people can be “sold” by a good salesman.
Mike’s “The $400 only matters when all other things are equal” VERY true statement. My experience says, it ONLY comes to price when all things are equal. But things are NEVER equal! It is up to us to distinguish ourselves from our potential clients with education. Tom has a great idea too… The split the difference & the carry the $400 interest free… I have done both of those many times. ‘Tis a very slick closing technique. I sold one yesterday ‘You are the highest bid but we want to do biz with RoofDude Roofing’. Talk about music to my ears! They confirmed that everything wasn’t equal & price wasn’t the determining factor.
TOM U – Just thinking out loud here…but If Ole Willie is ready to drop his price for just one job by $400.00 would he be willing to do the same for 10 Jobs at $400.00 each? Suddenly there you have 4 grand which would buy quite a bit of legitimate advertising, establishing your brand name in your market and perhaps curtail these, “We want to use your company…but” dilemmas. Just a thought…and by no means meant as a personal attack on Willie’s Business practices. Most of us, at one time or another have experienced the lack of revenue, so we understand how important immediate income can be.
JSC – Well, in the past I’ve done a LOT of work based on price. And, although I like making a handsome profit on each job as much as the next guy, those jobs are few and far between around here. Made my best $$ overall during those times I kept a smallish crew going steady at a moderate profit for years on end. Sometimes turned over $300K gross per month. Trying to get a higher profit margin would have probably dropped that gross 80-90%. This was in new residential.
Residential re-roofing is a different animal, and not one I like. One sale, one job not for me.
TIP TOP – On a shingle re-roof I usually give the customer a number of shingle options differing from economy to top of the line. Higher the product line higher the profit. If they complain about the price I mention that they might consider the economy option it being the best value and tell them its contractor pricing therefore I have not room to negotiate. And since we use only the best material and accessories, the only place to save money would be if we began substituting or omitting components such as ice & water shield, or used standard ridge instead of vent ridge, etc, etc. If there is still a problem I will suggest a discount on a roof upgrade not the whole job.
I am a residential roofer but I do not like having to deal with the lunatic fringe. I only call them that, those homeowners who want the lowest price and can not understand why you are so much higher than JoeBlow Roofing who has twenty illegals tearing the roofs off in the morning and have it roofed by dark of the same day. I still like residential roofing but like dealing with real estate pros, manufactured home resale people, property management people, and anyone associated with the sale, repair, remodeling end of residential housing. And regardless of whether it is the lunatic fringe or our best clientele -we offer the menu of roof options-I like that term much better than price options. And better than that I love this game of selling. I have to measure one up tomorrow for half of a manufactured home-2 layer tear off. Hip-hip-hooray-I love life.
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