Ever bought a pair of gumboots?
Once I brought a pair from a certain large chain.
They were cheap, and at the time it seemed like a good deal.
But after using them 3-4 times they split, so I took them back and exchanged them for another pair. Same thing happened - I didn't bother taking them back again.
I had such a small amount of use out of them, and if I look at the time I spent going back and forth, these were actually a very expensive pair of gumboots compared to a higher priced longer lasting pair.
If I’d known the risks associated with buying this product, I would have gone elsewhere.
Perhaps I should have worked it out by the price, but I didn’t think too much about it, and no one told me, so I was none the wiser.
I think you can see where I am going with this.
Cheap isn’t always a good deal.
So with prospects we are quoting for – how do we let them know we are worth the extra money?
Last month we talked about what hourly rate you should charge to make profit. That’s the first step – knowing what you need to charge. If you missed that one, go here.
If you’re not charging enough what can you do?
What if you put your prices up and you start losing jobs?
Well, you might lose the odd job, but chances are, you wouldn’t have made money off some of those jobs anyway.
Research shows that 15% of buyers will buy the cheapest regardless of quality. These are the ones you don’t want – they are generally very good at complaining if they perceive things haven’t gone perfectly.
The other 85% have other factors that are also important in the decision. Like quality, reliability, completion times, expertise and risk. These are profitable customers you want, who will appreciate you for your service rather than the lowest price. So how do you get more of these?
Risk vs Price
When buyers have more than one option, they start assessing the perceived risk vs price. If the risk is low (installer seems to know what they are doing, using good materials, will stand behind their service, etc), then in many cases they will buy the lowest price option.
However if price is low but the risk is too high (cheaper option might be missing something out, parts might not be as reliable, unsure if installer is experienced in this type of work, do they stand behind their work), they are more likely to see the value in buying a higher priced option.
Remember my gumboots?
Everyone has a story like that.
What product or service did you buy that you wished you never had?
It might have been that cheap builder who did a shoddy job on your renovation you then spent months arguing about - the smartphone case that promised it would survive a drop, but tragically, didn’t – maybe a gym membership which promised you the world at a weak moment, but which you never used?
You lost on that deal – lost time – lost money – and it stressed you out. It’s etched into your brain in the hopes you don’t make that kind of mistake again.
Guess what - the same thing has happened to your customers, and they remember too.
Your job is to show your prospect that dealing with you is the best and least risky option, even though it might cost them a bit more money.
Here are some practical ways you can do that:
1. First things first.
If your marketing is attracting the wrong kind of customers, it’s not going to work.
First figure out what you do best – what are you really good at? What is your edge is over your competition?
Then profile your ideal customer (your most profitable customer, who'll be easy to work with, give you repeat business, will tell others about you, who needs what you do best, etc).
Target them in your marketing. Then, when you get these good quality leads, be attentive and professional. Have a script and questions ready.
2. Get to know your customer and what they really want
When you talk to the prospect, take the time to really understand what they are after.
You can do this by asking questions like:
• What is most important to you about this project?
• Why is that important to you?
• Who is the decision maker on this?
• What do you really want to achieve here?
• Is there anything else we need to know?
3. Explain the process and why
Position yourself as a trusted advisor helping your customer solve their problems. Talk it through with them. Find the best way forward for them.
Explain your process and what happens if it isn’t followed. What equipment you use and why. This shows you are an expert and fully know what you are doing.
4. Social proof
Collect testimonials from your best customers and use them on your website, on your quotes, etc. Make your customers the hero of the story. It shows that others just like them have had great results, which in your customer's mind means they are more likely to get the same great results if they choose you.
5. Quotes
Make your quotes professional, include lots of details. Do not just send the quote off and hope the customer comes back to you. In many cases, they won’t.
Always present the quote. Get agreement to go through it with them. You’ll convert more quotes to contracts/jobs and learn a lot in the process.
If you follow these guidelines, not only will you be able to charge more but you will also get more business.
Happy Hunting!
Business Coach - Daniel - Email
PS: If you found this blog helpful, you can get my free ebook “Profit Strategies Every Business Owner Must Know” here
Once I brought a pair from a certain large chain.
They were cheap, and at the time it seemed like a good deal.
But after using them 3-4 times they split, so I took them back and exchanged them for another pair. Same thing happened - I didn't bother taking them back again.
I had such a small amount of use out of them, and if I look at the time I spent going back and forth, these were actually a very expensive pair of gumboots compared to a higher priced longer lasting pair.
If I’d known the risks associated with buying this product, I would have gone elsewhere.
Perhaps I should have worked it out by the price, but I didn’t think too much about it, and no one told me, so I was none the wiser.
I think you can see where I am going with this.
Cheap isn’t always a good deal.
So with prospects we are quoting for – how do we let them know we are worth the extra money?
Last month we talked about what hourly rate you should charge to make profit. That’s the first step – knowing what you need to charge. If you missed that one, go here.
If you’re not charging enough what can you do?
What if you put your prices up and you start losing jobs?
Well, you might lose the odd job, but chances are, you wouldn’t have made money off some of those jobs anyway.
Research shows that 15% of buyers will buy the cheapest regardless of quality. These are the ones you don’t want – they are generally very good at complaining if they perceive things haven’t gone perfectly.
The other 85% have other factors that are also important in the decision. Like quality, reliability, completion times, expertise and risk. These are profitable customers you want, who will appreciate you for your service rather than the lowest price. So how do you get more of these?
Risk vs Price
When buyers have more than one option, they start assessing the perceived risk vs price. If the risk is low (installer seems to know what they are doing, using good materials, will stand behind their service, etc), then in many cases they will buy the lowest price option.
However if price is low but the risk is too high (cheaper option might be missing something out, parts might not be as reliable, unsure if installer is experienced in this type of work, do they stand behind their work), they are more likely to see the value in buying a higher priced option.
Remember my gumboots?
Everyone has a story like that.
What product or service did you buy that you wished you never had?
It might have been that cheap builder who did a shoddy job on your renovation you then spent months arguing about - the smartphone case that promised it would survive a drop, but tragically, didn’t – maybe a gym membership which promised you the world at a weak moment, but which you never used?
You lost on that deal – lost time – lost money – and it stressed you out. It’s etched into your brain in the hopes you don’t make that kind of mistake again.
Guess what - the same thing has happened to your customers, and they remember too.
Your job is to show your prospect that dealing with you is the best and least risky option, even though it might cost them a bit more money.
Here are some practical ways you can do that:
1. First things first.
If your marketing is attracting the wrong kind of customers, it’s not going to work.
First figure out what you do best – what are you really good at? What is your edge is over your competition?
Then profile your ideal customer (your most profitable customer, who'll be easy to work with, give you repeat business, will tell others about you, who needs what you do best, etc).
Target them in your marketing. Then, when you get these good quality leads, be attentive and professional. Have a script and questions ready.
2. Get to know your customer and what they really want
When you talk to the prospect, take the time to really understand what they are after.
You can do this by asking questions like:
• What is most important to you about this project?
• Why is that important to you?
• Who is the decision maker on this?
• What do you really want to achieve here?
• Is there anything else we need to know?
3. Explain the process and why
Position yourself as a trusted advisor helping your customer solve their problems. Talk it through with them. Find the best way forward for them.
Explain your process and what happens if it isn’t followed. What equipment you use and why. This shows you are an expert and fully know what you are doing.
4. Social proof
Collect testimonials from your best customers and use them on your website, on your quotes, etc. Make your customers the hero of the story. It shows that others just like them have had great results, which in your customer's mind means they are more likely to get the same great results if they choose you.
5. Quotes
Make your quotes professional, include lots of details. Do not just send the quote off and hope the customer comes back to you. In many cases, they won’t.
Always present the quote. Get agreement to go through it with them. You’ll convert more quotes to contracts/jobs and learn a lot in the process.
If you follow these guidelines, not only will you be able to charge more but you will also get more business.
Happy Hunting!
Business Coach - Daniel - Email
PS: If you found this blog helpful, you can get my free ebook “Profit Strategies Every Business Owner Must Know” here