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The Price for Showing Price Too Soon (Part 1)

May 2, 2024
The Price for Showing Price Too Soon (Part 1)

Ask any successful business about the challenges they face to become tops in the field. There are several in the industry, but one that everyone will mention is overcoming the price sharks found in almost every market. There is a flood of companies that will advertise the absolute lowest prices without considering actual costs and whether or not they can keep the business afloat in the long term. They tend to take shortcuts on quality and service. That’s why they don’t last very long.

These companies put a large dent in our potential sales, whether it’s a new system or repairs. And homeowners have become accustomed to thinking of these price sharks first and foremost when it comes to getting bids, with these low-cost competitors becoming the new price to beat; at least that’s the thought. And it shows itself in a strange way – the homeowners asking for price right out of the gate during your presentation.

When homeowners get price information (what I like to call the investment options) too early, it never serves us well.

What I’ve learned in 20 years of selling systems at the kitchen table is that dropping off a number before you’ve had an opportunity to earn the business is a good example of putting the cart before the horse. In other words, they’re not really interested in buying right now. They’re going to make a decision later on down the road. They are simply in an information-gathering stage at the moment, and they usually eliminate the best overall fit because the price doesn’t sound low enough. A parent would liken this to a kid wanting to eat all the Halloween candy in one night. The kid doesn’t know it’s a terrible move, but you do.

Anytime we give a number to the homeowner before the time is right, it can never help you. It can never help the company. It can only cause problems. So, how do we avoid finding ourselves in that situation?

The only time dropping off a price early might be helpful is when you happen to have the lowest prices in your area, but that’s rarely the case for a really good business. Sometimes, it’s the self-employed guy working out of his mini storage or working out of his garage, but he doesn’t keep up with the price increases passed onto him from the manufacturer. He may not really even know he’s paying $500 more for a condenser than he was two years ago. So this is the guy who might win the battle just based on the price alone. Consumer buying behavior has been studied for decades, and it shifts every so often, but usually the foundations remain in place.

When you engage in any selling conversation with a homeowner, whether a service call or a sales call, your homeowner is doing everything in their power to evaluate the amount of risk. When the risk of making the wrong purchasing decision is high, it makes it very hard for people to say yes because a red flag goes up, and they become cautious. On the other hand, if the risk is very low, it makes it easy to say yes.

For example, if I go to Walmart and buy a flashlight and take it home and I don’t like it, I can return it to Walmart, get my money back, or get another flashlight. The risk of making the wrong decision is very, very low, and it makes it easy for me to buy that flashlight and take it home. There’s no real fear of loss.

But if I’m in the Walmart clearance aisle looking at a similar flashlight and there’s a sign on the shelf that says, “All sales are final—no refunds—no exchanges,” it makes it harder for me to buy it because now I might get stuck with it if I don’t like it. And the fear now increases, especially if it’s an expensive flashlight or an unknown brand.

So when this happens, it drives the consumer to get multiple bids, maybe shopping at The Home Depot to see what flashlights they have, and then maybe on to another store. Why? Because now the risk has been elevated, making them become more careful.

Homeowners are no different in that they’re trying to evaluate the amount of risk in the purchasing decision. And the bigger the item being purchased, the more careful they will be. So, they’re gathering all the information they can to make a smart choice when it comes to their HVAC system.

They’re sizing you up as an individual, your character, your integrity, your company’s reputation.

They want to get information about the brands and components you use, the way you go about doing your installations, your service, history, Google reviews, etc. They’re trying to gather all this information so they can make an informed decision with minimal risk.

Next time we meet, we’ll dive deeper into this to find out why there is a right time to reveal the price if you want your highest chance of success.