Back when I was in the HVAC, plumbing, and electrical business, I quoted a $49,800 job for a new friend. I didn’t want to, but he was in the planning stages of a pretty nice-sized home and trusted me to do the job right.
He wanted me to design the heating and cooling systems and heated floor systems for the house, and he wouldn’t take no for an answer.
I had been stalling because I didn’t want to bid the job. My concern was that when he saw how much higher my price was going to be I would lose a new friend. I really wanted to be his friend. Back in the day, I had lost friends because they thought I was a crook when I gave them a price for my work. I know that some of those friends aren’t worth keeping, but it still hurts doesn’t it?
Realizing that my price would look high, I began the process of preparing to make it about something other than price.
I began a discussion about creating a fresh air infusion system to create a healthy spring-time fresh air flow through the home. I believed and shared with him that the spray foam not only did a great job of sealing and tightening the home, but it also did a good job of keeping fresh air out of the home. I also began the discussion about controlled humidification and dehumidification in an airtight home. I knew that he would need both systems in order for his family to stay healthy in the home, but I also knew that no competitor would even be able to carry on a conversation about such matters. As it turned out, I was right.
If I hadn’t made the conversations about something else — something very important like the health of his family — I would have been perceived as a greedy contractor. It’s important to understand that when I say “conversation,” this was not a 10-minute talk. This was building the contractor-homeowner relationship carefully over time.
When he compared the quotes on the home, mine was $22,000 higher than the other two he received. However, he felt that my so-called competitors were not technologically competent enough to install this kind of healthy environment for his family, and none of them had added air exchangers or dehumidification into their quotes. The end result is we were paid what we were worth, and he and his family are still friends who we regularly share meals with.
Running a business is very expensive, so it is crucial that we price correctly and sell effectively. How many times are your technicians and salespeople discounting to people who are already sold? Want to be paid what you’re worth? Remember this:
“It is always about price, until you make it about something else.”
So, are you worth what you charge? Actually, you are worth more than you charge, but here is the key: It doesn’t matter what you think you are worth, it matters what your customer thinks you are worth.
As an industry, we went to flat-rate pricing to hide our labor costs, but then what happened? Amazon happened. The internet happened. eBay happened. Home Depot and Lowe’s opened on street corners all over the country selling HVAC, plumbing, and electrical products. The biggest kicker of all: smartphones happened. The customer now knows in 3 seconds what a part will cost. Why does that matter? Because we hid the labor in the part and now the customer sees that $195 part from you and me costs $5 at the store.
So again, are you worth what you charge? Not if the customer thinks you charge 20 times more than they can buy it somewhere else. So, we have to quit hiding labor in parts, don’t we? Or we must give the customer a reason to look for value outside of the part itself.
Example No. 1: “Mr. Customer, your sink needs a new drain basket gasket, and here it is in my price book for $49.00.”
Customer says, “That seems like a lot for a gasket.” The customer is correct, that is an awful lot of money for a gasket.
You are worth what you charge, but if the customer won’t pay it happily, then business can be a real pain. Who takes the heat when the customer pushes back? Well, first your plumber takes the heat. Your plumber feels the rejection. Your plumber is the one who is tasked with trying to handle that objection. And your business feels the pain at every level.
Let’s solve the problem. Who will pay what you’re worth? A happy customer.
- A happy customer usually has no price objection at all;
- A happy customer has no sales resistance. After all they called you because they actually want it fixed;
- A happy customer will have no buyer’s remorse; and
- A happy customer will gladly say nice things about you and provide referrals.
Anything less than those four statements may not put you out of business but will keep a continuous stress on it. Like gum on a shoe, you just can’t get it off, it just doesn’t feel right. It’s a pain.
The solution to being worth what you charge lies in this statement, “It’s always about price until you make it about something else.” Let’s take the gasket example from earlier and try it using a new approach:
“Mr. Customer I’m a little concerned. I’ve found a problem in your sink drains, and I have a couple of suggestions. Would you like me to go over them?”
“Well, my best suggestion would be to do a complete rebuild of the sink and drains since I have to disassemble most of it anyway. But if I did that, it would be about $989. Or I could just take everything apart and replace the damaged parts for about $389. What should we do?”
Customer: “You know what? I don’t want this problem to come back, just do the complete rebuild.”
Are you worth what you charge? I must chuckle when I hear this because when this happens a few times you will realize that your customer thinks you are worth more than you charge. He just doesn’t think parts are worth much, and you know what? He is right.
Publication date: 10/22/2018