How much should you pay for a good piano?
Before you dismiss this question as irrelevant to your business, seriously answer the question: How much should you pay for a good piano? $1,000? $3,000? $10,000?
The obvious answer is, “It depends.”
The less obvious answer — and the one that is having a potentially devastating effect on your business — is “I have no idea how much a good piano costs because I’ve never bought one, and I really have no idea what’s important when choosing one.”
Guess what? When it comes to buying windows, roofing, kitchen remodeling, siding, bathrooms, etc., your prospective clients have no more idea what to expect to pay than you would if you walked into a piano store. Because of your prospects’ lack of experience and familiarity with what you sell, they have no idea how much it should (or will) cost, and therefore generally will assume it will cost a lot less than what you are going to ask them to pay.
Take the example of a metal roofing company. If you asked a prospect, Mr. Johnson, to guess how much it will cost to replace his average-sized house with an asphalt roof, he might say around $5,000. Then ask him how much more he thinks it will cost to put a metal roof on his house instead. He might say something like “50 or 75 percent more.” In his mind, that would make the metal roof about $7,500 to $8,500.
The problem is it’s almost certain Mr. Johnson has vastly underestimated both numbers. The asphalt roof is actually more like $10,000. And a metal roof normally will cost two and one-half to three times more than an asphalt roof. In reality, he’s looking at $25,000 to $30,000 for the metal roof.
No wonder sales meetings frequently take two to three hours. It takes half an hour to build up the product and service, and then another two hours to operate the defibrillator and call the paramedics after you give your prospects a heart attack with your (in their mind) outlandish price.
Good news, though. There’s a solution. It’s called price conditioning, and the proper time for it to happen is before you show up at Mr. Johnson’s house. I’m not talking about simply forking over a price list. I’m talking about giving him certain pieces of information before you meet that will give him a feel for what ball park you’re playing in. If you can narrow the expectation gap, your chances of a quick, easy sale go up.
Here are four major components of price conditioning:
Straightforward Statements. This is particularly important in industries where low-price competitors are prominent. It can be hard to sell a $600 window in a market with $189 splashed everywhere. Combat this with straightforward discussions of prices. Try something like, “How much should you pay for a good replacement window?” Explain what you get for your money in various price ranges.
Positioning Statements. If the industry isn’t quite so obvious with the low price guys, you might need to take a more subtle approach. Try statements like “We’re not the fastest. We’re not the cheapest. We’re the ones who take the time to do the job right.” These statements communicate you’re a higher-end provider who prides yourself on quality. They will attract the clientele you want, and give prospects a good idea of where you stand, price-wise.
Contractor Standards Guide. This is a simple printed or online guide that spells out standards any reputable contractor should be able to abide by in categories such as financial stability, reputation, workmanship and professionalism. By spelling out the standards and illustrating how you meet or exceed them, prospects realize you are a top-tier provider and therefore probably a bit more expensive — but worth it.
Product Reports. Remember the piano? Just as you have no idea what makes a good piano good, your prospects have no idea what makes a good window good, or a good installation good. Take time to educate them. Create a report that explains U-factors, NFRC labels and impact-resistant glass. Do the same for whatever you sell. Chances are high your prospects don’t know this stuff now and will be much more willing to pay for it once they do.