Many remodelers I meet are worried about pricing themselves out of a sale. They end up quoting too low with the hope of adding upgrade options later. This “good, better, best” technique is a mistake that will lose sales. I recommend that you instead try leading with your best offer and sell a “best, better, good” program.
Consider the extended warranty that the office supply salesman springs on you at the checkout counter after you spend 30 minutes selecting just the right computer for your business. Every fiber of your being declares this is a winning deal for the seller and a bad deal for you. You reject the offer instinctively, failing to see a mistake you might be making.
Imagine that same salesperson instead telling you that an extended three-year warranty is standard for every computer on the shelf. She says, “I don’t know about you, but if my computer goes down for a day, it means huge problems. If I had to go a week without it, I’d be lost. Our warranty assures you will get onsite service within 24 hours to keep your business running smoothly.” Everything about the offer appeals to you except the unexpectedly higher price that you believe you’ll get elsewhere. So you balk and ask for a lower price.
The salesperson lets you know that she can lower the price if you’re willing to forego the three-year warranty and satisfy yourself with the manufacturer’s standard one-year offer. This means you might end up being without a computer for a week while it is repaired offsite. If you’re like most people, you’ll agree that the temptation to buy the extended warranty is much greater in the scenario in which it is included in the first price.
As a means to upsell and protect your profits, introduce your higher end products and services first. You will be surprised at the many benefits you receive by the practice.
- Your brand value will be based on the high-end work you do. Buyers of the Mercedes C-Series and BMW 3-Series buy those products because they want the status of owning the brand but can’t afford the more expensive products of these luxury car makers. Sell the best you can offer first as a means of letting prospects know the capability of your brand.
- Customers will shop less. One of the laments I hear from home remodelers is that their competitors are “low-ballers” driving the price down for price-driven decision makers. The real problem is that remodelers all start by quoting a project with options for add-ons. Consumers see the basic price and feel compelled to shop around to make sure all options are properly explored. When you provide “best, better, good” choices, you in effect have done the shopping for your clients.
- Consumers will spend more with you. This response results from a psychological phenomenon called the “Law of Contrast”. When two options are presented side-by-side, the law of contrast reveals that people will choose the preferred option even at a higher price. Thus the computer salesperson who sells the extended warranty as part of the original price will sell more than the salesperson who springs the add-on at the checkout counter. Once a homeowner has a taste for the best project you can offer, they will be reluctant to cut corners. They will find a way to justify an additional investment in their home.
You can believe that consumers are more educated today than ever
before; you also can believe they are confused by all of the choices they see in
their research. Ultimately, the highest authority a customer can have is is a
credible remodeler providing sound advice.
If you quote only the basic option to overcome the fear of pricing yourself out of the market, you are a professional “bidder.” But if you can offer alternatives and lead with the best your client can have, you establish a role as the credible broker who takes time to research the market for your clients.