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Have you ever been on a sales call and decided to bid the project at a higher price because you knew the homeowner was going to drive you crazy?  Thinking to yourself, “I’m gonna add an additional 20% to my proposal price to account for the headache factor.  If I get the job great, if not who cares?”  Did you still get the job? 

I find this to be a bit ironic.  Contractors can price the job to lose and still get the project but in the same breadth they claim they struggle to protect their everyday price from their low-priced competitors.  Why is this?       

I think this happens because most of our pricing issues are the result of what’s happening in the mind of the salesperson and not the customer.  Without proper training and coaching, salespeople can become predisposed to price objections and condition themselves to believe they need to offer a discount.  This becomes a self-fulfilling prophecy that finds them quickly offering a discount – whether it’s needed or not.  

I had a personal experience where a salesperson (who was also the owner) came to my home to sell me a fence that I wanted installed on my property.  I called this particular contractor because he lived in the same town as me and was responsible for many of the fences that were installed in my neighborhood.  From what I could see, he did a really nice job, he was local, and I just assumed he’d be a safe choice. 

Anyway, he came to my home and availed himself as a really nice guy with zero sales skills – and I’m not being nit-picky here, but he had zero sales skills. He lacked confidence, didn’t follow a process, and he made no effort to explain why he would be the best fit for my project.  His entire sales “presentation” was limited to having me look over some photos to tell him the type of fence we wanted on our property.  It quickly became very clear to me that he wasn’t there to sell us on using him, he was there to give us a price.    

So, check this out, when he came back from measuring our property, he asked us which fence style we wanted and proceeded to pound away on his calculator.  After a few long minutes of feverously crunching the numbers, this business owner salesperson (not looking up from his calculator) in a very shaky voice, told us he could do our project for $6,000.  My wife was shocked by his low price and immediately jumped in to say, “Wow…that’s awesome.  I thought it was going to cost us a lot more than that.”  Now, with this type of response, the contractor should’ve closed the deal.  It would be so easy for him to simply say, “Wow…great.  I love when that happens.  Why don’t we go ahead and get you on the schedule?”   But he didn’t say that.  Instead, still looking down at his calculator, he said in a more confident voice, “Ummm…I can do the job for $5,500.”  Yes, after my wife told him his $6,000 price was a great price - he went on to lower that price by $500.   What happened next is even more shocking.  Before either of us had a chance to respond, he looked up from his calculator, made eye contact with both my wife and I and said, “I can do for $5,000 but that’s my best price.”

We earned a $1,000 discount in a matter of seconds – and we didn’t even ask for it.  Now, as confident as I am in the fact that our fence salesperson is an extreme, worst-case scenario, I do have to wonder if this is one of those scenarios where the salesperson felt guilty about his price? 

I’d assume most people think sales guilt is a function of an uneducated employee not knowing the true cost of doing business, but owners feel guilty too.  Think about our fence contractor who wants to charge and believes he’s worth his $6,000 price, but he also knows his cost of doing business - and his projected profit - and he might feel guilty asking people to pay that full price.  He might’ve thought we couldn’t afford the $6,000 price and felt guilty putting us in a tough position or maybe he’s sensitive to what his competitors charge and felt guilty charging us more.  Regardless of the reason, they need to recognize that their price is a function of money and has nothing to do with anything else.         

Another reason salespeople feel guilty about their price is because they have a negative image of sales, and they believe selling is dirty.  They think to be a successful “closer”, salespeople need to lie or use tricks or techniques to manipulate their prospect.  And the funny thing about psychology is that whether you are actually doing anything morally or ethically wrong is not as important as your belief of the wrongdoing.  By doing or saying anything that would be said or done by a “typical salesperson”, the owner believes he or she is guilty by association – so they distance themselves from “selling” and they take the path of least resistance – which subsequently erodes their much-deserved profits. 

Regardless, we need to understand that our price is not a function of the market, the competition or what the customer wants to pay for the project.  Your price represents the sum total of all the costs incurred by your company to deliver the quality, service and attention to detail needed to ensure a successful outcome for everyone involved.  The fact that your competitor is willing to do the job for 20% less has no bearing on what it will cost your company to deliver the results your customer seeks.  It’s not the salesperson job to determine how much money the company should make or what the customer can afford.  It’s the salesperson’s job to increase the customer’s perception of value to the point where they can justify the additional cost required to use you on the project.  In other words, salespeople need to stop bidding the job and start selling the project.

Getting back to my fence project, after completing the job, the owner came to collect the payment and asked me to come in the yard so he could show me what he did.  He told me how installed the fence, how the footers where below the frost line and how he filed down the exposed nails because he didn’t want my kids to get scratched.  As I handed him his check and thanked him, I told him I teach sales and asked if I could give him some free advice.  I told him how he gave me a $1,000 discount without me asking and how he did a much better job selling me after the project than he did at the initial meeting.  I told him if he’d told me then what he told me now, he could’ve felt better about his $6,000 price and not felt the need to give me the discount.  I offered to buy him lunch explaining how I could help him make more money.  His response?  “I do pretty well for myself and don’t want to take advantage of people.” 

If you struggle with guilt or want to learn more about selling value and escaping the price driven sale - please don’t be a stranger.  I’d love to learn more about your business and I’m always eager to see if and how I can help you take your sales and profits to an even higher level.  Email me:  JDeRosa@SRSDistribution.com