The challenge: price transparency. From appliances to plumbing fixtures to cabinets to subcontractors, homeowners know they can find virtually any remodeling component online for less than you need to charge to cover your overhead. How do you defend your markup — and explain your added value and expertise — to intensely price-sensitive consumers, especially on small jobs?
Michael Lee’s solution: To avoid being assessed based on price alone (which could quickly drive you out of business), reposition your services from mere remodeling to unique craftsmanship that brings homeowners’ dreams to life.
While homeowners may be able to remodel for less than you charge, they can’t get you for less money. This distinction is particularly important with buyers who use price comparisons as a negotiating tool.
Unique Value Proposition
Prospects will focus on price when they don’t see your value and/or they think of you as virtually the same as your competitors. For that reason, make your jobs as unique and different from your competitors as possible.
One way to do this is by incorporating vivid detail into your proposals. For instance, bundle your products and your services through language that helps prospects envision their completed project: cherry millwork, intricate paint schemes, custom fireplaces, granite counters, etc.
Design Fee
Consider including a “design consulting fee” that covers a certain number of hours in which you will use your expertise to ensure that the homeowner gets exactly the job he or she wants. Homeowners don’t just want a remodel; they want someone to help them configure the space and select the right materials, colors, and appliances. The better educated your clients are, the more they will appreciate your value.
Financing Edge
If you have good relationships with lenders, position them as helpful tools for evaluating different methods of paying for the project. Your prospect may also find affordable payment plans more attractive than lower-cost projects that require cash payment.
Warranties and Testimonials
Build prospects’ confidence in your work, and differentiate your service from the competition, by showing how you’ll stand behind it. Most people understand that cheap jobs often cost more in the long run.
Consider extending manufacturers’ warranties, and explain how your warranty extends beyond materials to the entire project. Also provide testimonials from past clients — and always feature testimonials and client “report cards,” if possible, on your website.
The Right Response
Finally, learn to be a great negotiator. When someone says, “I can get it for less,” try this simple response: “This is the best price I can give you for guaranteed workmanship with quality materials. How do you think anyone can do it for less?”
The answer is pretty obvious, and if the prospects don’t want your quality of work, you may be better off without them.
—Michael Soon Lee, MBA, is an expert in sales and negotiation. He is the author of Cross-Cultural Selling for Dummies and Black Belt Negotiating. 800.417.7325, www.ethnoconnect.com.
