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The Price for Showing Price Too Soon (Part 3)

May 16, 2024
The Price for Showing Price Too Soon (Part 3)

We’ve been talking about many reasons it’s a bad idea to drop off a price too soon. Meaning that you give your price too early in the demo or you give it before having an opportunity to put value behind it.

I don’t want to beat a dead horse here, but I think it’s important to cover even more reasons, because some of the reasons aren’t exactly obvious. Take, for example, the salesperson we’ll call “Walter,” who leaves his price with the customer the moment they ask for it. After some sticker shock, the homeowner decided against purchasing now. They say they want to wait 12 months.

Problem #1

What happens when 12 months pass, and they restart their research into a new HVAC system? My experience tells me people like to shop around for price because they think it’s the most important aspect (it isn’t), so they’ll call 3 shops on average. But wait, they don’t need to call Walter’s company… because they already have the price he left them last year.

The homeowner has Walter’s price of $13,000 and they have a bid from Company A, coming in at $14,000 and Company B at $14,500. So they decide to go with Walter’s company because they’ve met with him in person and he happens to have the lowest price. See the problem?

Walter’s price is outdated. It could represent the price of a system he no longer carries. It could simply represent the old price of the unit, as inflation raises its ugly head just about every year. Either way, there is soon to be a misunderstanding and disappointment when the homeowner calls Walter and says they’re ready for that install now. Walter has to break the news that the price from 12 months ago is no longer valid, and the updated price is $15,000. This scenario happens more than we may think.

Problem #2

Let’s say in another scenario that your homeowner has your bid from 12 months ago, which is $13,000. It’s been 12 months, and they call 2 other companies to get their bids. Company A comes in at $11,500, and Company B comes in at $12,000, both of which are lower than yours.

Because you dropped the price before the homeowner was ready to purchase last year, they have now called and received these 2 bids that came in lower than yours. You won’t be given the chance to defend your price to the homeowner. They won’t know that the extra funds they’d invest in your system would easily be worth it in the long run.

Have you ever gotten into trouble with your parents because your sibling tattled on you for something you didn’t actually do? And your parents were so upset that they grounded or punished you without having a chance to defend yourself? It’s an awful feeling, because you could have cleared things up and made them understand with just a few sentences.

This is what happens to Walter, who won’t get a chance to defend his price to the homeowner.

Problem #3

Or if Company A and Company B are actually a little higher priced than you, they have the chance to defend their price because the homeowner is talking to them. And if they have good salespeople, you’ve lost out again.

To make matters worse, Walter won’t even know any of this has happened. He won’t know they’ve called for other bids, and we won’t be aware that the homeowner has bought from a competitor.

Good salespeople from your competitors can wreak havoc, so we need to do our best to wrap up a sale while it’s in front of us. Because they can steal your deal before you can blink. Know how I know?

When I started my latest company, we did $28 in installations in the first 4 years!! And get this — we had less than 1,000 service agreements of our own. That means most of the $28 million in installs were on someone else’s service and maintenance customers, because they weren’t on top of their game.

The homeowner has been calling Joe’s Heat ‘Em and Cheat ‘Em for service and maintenance for the past five years, but now they want a new system. Once my salespeople are in front of them, we close the deal because our salespeople apply all the training I’ve given them.

Next time we chat, we’ll cover how to prepare for the price question like a pro.