# Keeping a full schedule but losing jobs



## casey344 (Dec 15, 2005)

We've been able to remain 6 months out with our schedule but losing jobs and wasting time with the price concious buyers. We are in a niche market with 3 of us who compete against each other on a regular basis. One of my competitors is 18-20% less on a similar 50-55k project and I'm at the point that I don't want to even bid on projects where I know they're involved since I haven't found a tactful way of explaining why I'm more expensive. 

I know that's a bad attitude but the bulk of my jobs come from 'less price conscious buyers'. We get calls from clients and neighbors of those who have gone with this cheaper contractor and have had a bad experience. I don't exploit this in my sales presentation and have difficulty explaining why we are more without putting down this competitor. The reality is that he doesn't come back to fix issues, pays his guys cash to cheat taxes and insurances and builds an inferior product that looks the same on paper as what we are offering.

Those clients who I've told "I'm not your guy if you're looking for the low bid" have not been very receptive to that response. I don't want the work to run out and concerned about the next cycle when this current boom busts.

I'm interested in hearing any of your thoughts about this.


----------



## FrankSmith (Feb 21, 2013)

Perhaps charge a small fee to bid on larger jobs to sort out those more likely to shop based on price. Even a $50 fee could save you a lot of wasted time bidding.


----------



## NJ Contractor (Nov 12, 2016)

Sounds like your competitor won't be around for long the way he is running his business. 

I would not worry about what he is doing. Just educate your clients and keep presenting yourself as the professional you are. The cream always rises to the top. 

As Frank has mentioned, you could also charge a fee to design/prepare estimates. This will help separate the wheat from the tares.


----------



## KAP (Feb 19, 2011)

The price you've determined to charge to be in business and provide for your family is what YOU need to charge... just because someone else is charging less doesn't mean your needs have changed... 

As to tact, go third-party that they can verify (put it in your own words/vernacular)... 

_*"I understand there are companies in every industry that charge less and companies that charge more, and they know exactly what their services are worth. If you check with Consumer Advocates, they almost universally advise against the lowest bid in an apples to apples comparison as they usually carry the most risk. The advantage you have in this circumstance, is you can contact past and current customers to get their perspective as to whether or not our services are worth what we charge to be in business and feed our family. You can also take comfort in the knowledge that enough customers that go through the same process as you when choosing to select a company STILL choose to not only use us but are willing to wait on our current window of 6 months for their project. We want you to be totally comfortable in making this decision, and hopefully this has provided you with some perspectives to consider."*_​_*

*_ 
Third-party (i.e. - past and current customers, Consumer Advocates) take it from just YOU saying it...

But keep in mind, the more you give the impression that YOU think you have a pricing issue, the more the CUSTOMER will think so...


----------



## casey344 (Dec 15, 2005)

*Thank you*

Thank you KAP, this is good information.


----------



## DaemarConst (Aug 13, 2016)

Your doing the right thing, just spend even more time with customer satisfaction. Your doing the right thing by not bad talking this competitor, you don't want to get hit with a defame lawsuit. Good luck! keep up the good work!


----------



## griz (Nov 26, 2009)

Educate your clients.

Use the cheap as a benchmark and explain how you out perform them without mentioning them.....

You hire local guys.

You pay taxes and insurance so you are legal with all entities concerned.

Your quality materials and products that go in to your jobs.

The extended life expectancy of your project in relation to the above.

Perhaps less maintenance.

Value upon resale.

You are in business, locally, long term to take care of any minor problems that may come up and are available for any future needs.

SELL YOUR SELF AND YOUR COMPANY....:thumbsup:


----------



## TaylorMadeAB (Nov 11, 2014)

I've found that the simple fact of having workmanship comp and liability is enough to set you apart from other guys. The customers who care about that sort of thing will notice, and the ones who care about price more won't. 
Just make it obvious that you're a legitimate business and the customers you want will take heed. 


Sent from my iPhone using Tapatalk


----------



## casey344 (Dec 15, 2005)

*Competitor*



NJ Contractor said:


> Sounds like your competitor won't be around for long the way he is running his business.


They've been around awhile and do twice as much work as I do. The lake is pretty wide open so one trip up/down the lake and you can see what most everyone is working on. 

Former employee's of theirs who work for me now said they were paid cash most of the time with the occasional check. Someone got hurt about 18 months ago and their earnings were questioned by workers comp and we heard that incident sparked some kind of investigation and they've since switched to a payroll company. 

They've just added another barge/trackhoe to their operation and don't appear to be going anywhere anytime soon.


----------



## NJ Contractor (Nov 12, 2016)

casey344 said:


> They've been around awhile and do twice as much work as I do. The lake is pretty wide open so one trip up/down the lake and you can see what most everyone is working on.
> 
> Former employee's of theirs who work for me now said they were paid cash most of the time with the occasional check. Someone got hurt about 18 months ago and their earnings were questioned by workers comp and we heard that incident sparked some kind of investigation and they've since switched to a payroll company.
> 
> They've just added another barge/trackhoe to their operation and don't appear to be going anywhere anytime soon.


Hmmm, sounds like they are working on gaining market share through price competition. I think the advice given above is good and you have to keep articulating why you are the better choice through advertising and while working with new leads. 

The other options are either to expand your market and/or range of services or lower your costs.

Best of luck, I have the same issue in NJ with high-end renovation work. The large jobs are fewer, the clients have tightened their purse strings and the competition keeps dropping their pants to keep their guys working...


----------



## aquakbd (Aug 19, 2016)

Explain your work process and show them reviews about the work of your company. The price difference will be more than clear and you won't have to explain a lot. I believe that those who want a job well done won't have a lot of questions or remarks about the price.


----------



## casey344 (Dec 15, 2005)

*Process*



aquakbd said:


> Explain your work process and show them reviews about the work of your company. The price difference will be more than clear and you won't have to explain a lot. I believe that those who want a job well done won't have a lot of questions or remarks about the price.


I've been running into alot of clients lately than are willing to sacrifice the quality of material and workmanship for the lower price. Most often we are working with people living in lake homes upwards of 600k and you would think 5-10k on a 50-100k project, when the differences are so obvious; would be a drop in the bucket. I have a difficult time explaining the difference in value and often times don't even get the opportunity. 

I'm working with a client now that is giving me an opportunity to explain that difference. We'll see how it works out. He wants my 65k dock for my competitors 55k price. I've already found (10) support pilings that I would be using that he doesn't have on his drawing. In pile driving dollars thats about 4k. Do I stoop to his stretched span build quality to match the bid or push my beliefs based on experience? An engineer would sign off on the spans my competitor is offering but they engineer based on deck engineering and I know from experience a dock in the water subjected to wind and wave stress requires more support.

I heard a Construction PodCast recently that said "You can be right or you can be rich". Referring to giving the customer what THEY think they want instead of what YOU know (based on your experience) is the best value. I've been kicking that comment around for the past few weeks.


----------



## Rio (Oct 13, 2009)

Tell them what you just wrote, you do more than the minimum which is what code is.


----------



## Rio (Oct 13, 2009)

Thinking of your situation reminded me of how one of the best salespersons of all time, Zig Ziglar R.I.P., used to handle the situation


----------



## A&E Exteriors (Aug 14, 2009)

Rio said:


> Thinking of your situation reminded me of how one of the best salespersons of all time, Zig Ziglar R.I.P., used to handle the situation
> 
> https://youtu.be/cYYrrQdR5hc


That was powerful


----------



## JBM (Mar 31, 2011)

I dont know what trade your in ,but if its a visible trade that requires a degree of talent, I personally just make sure my product is hard to replicate, esp. on the cheap, it would be impossible. 

Increase your marketing too.


----------



## casey344 (Dec 15, 2005)

After redesigning the dock so it includes all the features he asked for I've come back with a 63k price tag compared to my competitors 55k bid. My design has several material and structural improvements. 

He was about to drop 55k on a dock that wouldn't serve his needs because my competitor didn't talk thru how he wanted to use the dock.

He told me if I agreed to do the work he'd sign the contract for 60k and I could build it anytime as long as it was done by next spring. 

He sent me this email 3/4 hours later:

"I need your help on this project to $60,000 to make this happen. I can sell more docks for you in the future and promise to give you great word of mouth just as Jay did for you. He is the reason I called you and I promise to do the same for you.That's worth more than $3000. I would love to do business with you Casey but please understand. Everybody, including me have their limits and I will have to go with <competitor> if your budget can't flex as mine has already gone up $15,000 more to have you do my dock. As Trump would say "Not Good"! Let me know please. I do not like wasting people's time.
Thanks,
Jim Customer"


Sent from my iPhone using Tapatalk


----------



## casey344 (Dec 15, 2005)

JBM said:


> I dont know what trade your in ,but if its a visible trade that requires a degree of talent, I personally just make sure my product is hard to replicate, esp. on the cheap, it would be impossible.
> 
> Increase your marketing too.



We build docks, I'm a marine contractor.


Sent from my iPhone using Tapatalk


----------



## griz (Nov 26, 2009)

guess it depends how bad you need/want the job....

stretching it out until next spring.....BS

only way to make money is get in and get out.

do it right once, efficiently & with quality....

or move on.....


----------



## KAP (Feb 19, 2011)

Just keep in mind referrals will be looking for their discount as well...

If the competitor was at $55K and you were at $63K, where is he getting that he is coming up 15K to use you?

He is confusing your pricing as a flexible budget... 

If you drop pricing AGAIN without him giving something up, he has no idea on how deep the discount well is... depends on how bad you need the job and whether or not you have Capital Reserves or Emergency fund to absorb the loss, but he is signalling to you he wants you otherwise he wouldn't pay more (I tend to be a little verbose, so put the following in your own words and shorten it to your liking while maintaining the context)...
*
"Mr. Customer, thanks for the email ... while I was gad to hear from you, to be honest, I was expecting a different email telling me that we were a go after the additional work I put into your revised quote at no charge... keeping in mind you had budgetary needs, I had hoped that by taking the additional time and reworking your quote to find ways to save you money through redesign while at the same time ensure it had all your requested features and that the dock met your needs after our last walk-through, that you would have been ecstatic that I was able to save you another $2K without sacrificing any of those crucial elements... add to it, the revised design includes several superior material & structural improvements. 

Jim (or whatever his name is), I buy things all the time and I completely understand where you're coming from money-wise, and I really wish it was as simple as saying "sure, no problem, I can give you another $3K" but the reality is that without looking at scaling back the project in design and/or materials to get you to where you'd ideally like to be, the only place where ANOTHER $3K could possibly come from is out of my families pocket. I can offer you I really hope I've conveyed to you how much I want to work with you on your project. I also hope you feel that I spent the time with you and that I really heard you in discussing your project and that my dedication to meeting your needs through the flexibility, quality and depth of my designs, as well as the fact that I've professionally represented myself and my company, would be reflected in any referrals you may send my way, should we ultimately end up not working together on this project because of your budgetary constraints. 

Jim, keep in mind that this dock is going to last the next XX years, so that $3K works out to pennies a day (or whatever it works out to be) and in return you'll end up with the better design and end product without sacrificing materials or structural improvements, which is really the most important thing long-term. And the best part is you already know this to be the case because you were refereed to me by Jay; there's no guess work or substitution for that kind of peace of mind. That said, with all that is included and the time I've committed to the design / specification process, I believe my price of $63K is (key phrase) fair for both of us. Let me know how you'd like to proceed. Thanks homie..." :whistling​*

You're conveying...

1. Your time is valuable, and you know it...
2. That you've already GIVEN him additional value added services at no charge...
3. That your design/materials/structural improvements are superior to your competitors...
4. That if he wants you to give up money going forward he has to give up something in return...
5. And that what he is really asking is for YOU to make less money on the same project...
6. He was a referral so that takes a lot of the guess work out.​

All of this is predicated on how bad you need the work and if you can absorb a loss of $3K off this project. 

One last thought on the $3K, you have to check your state laws, but one of the ways you address that, while at the same time focusing on referrals is to offer him a $1000 rebate on his next three referrals... 

Best of luck... 8^)


----------



## TaylorMadeAB (Nov 11, 2014)

Is having signage on his completed dock a possibility? Get him to agree to have your sign up for a certain amount of time, and knock down his price a bit? 


Sent from my iPhone using Tapatalk


----------



## casey344 (Dec 15, 2005)

griz said:


> guess it depends how bad you need/want the job....
> 
> stretching it out until next spring.....BS
> 
> ...


We're booked to November-December now. I'm sure I'll close several jobs with no concessions between now and then. Pushing it to fall/winter sounds good now I've been here before thinking we'd have a gap in our schedule when the cold weather hits. I had several off-season discounted jobs last year. We were able to stay busy but I came into this season with a back log. We are in the South Carolina so rain affects our schedule more than anything else.


----------



## casey344 (Dec 15, 2005)

TaylorMadeAB said:


> Is having signage on his completed dock a possibility? Get him to agree to have your sign up for a certain amount of time, and knock down his price a bit?


We install a license plate sign by default and probably get more business from those than any other. If he were in a busier area I may consider offering a discount for a banner size attractant but he's pretty tucked away.


----------



## casey344 (Dec 15, 2005)

DaemarConst said:


> Your doing the right thing, just spend even more time with customer satisfaction. Your doing the right thing by not bad talking this competitor, you don't want to get hit with a defame lawsuit. Good luck! keep up the good work!


I don't think I'd stoop to that level but is it really defamation when you are telling the truth? :whistling


----------



## casey344 (Dec 15, 2005)

KAP said:


> If the competitor was at $55K and you were at $63K, where is he getting that he is coming up 15K to use you?


In his head he had a 45k budget and bid #1 came in at 55k. Now we are up to 63k if he chooses to work with me. I don't know where people pull numbers from or how they can expect us to meet that budget because that's what they "think" they should pay. :no:


----------



## hdavis (Feb 14, 2012)

Contractors talking bad about other contractors just makes all contractors look bad.

If there are 3 contractors in your area, and one is doing 2X what you're doing, in the long term you have to worry about being put out of business because of your low market share.

Generally, you can do well having high margins and low volume, or low margins and high volume. The middle ground is a tough place to live, because you can get squeezed from both sides. 

Under the circumstances, I think you'll need to have tiered proposals. Bare bones that will still be permitted, and Higher quality higher margin ones. Consider only putting your signs on the higher quality ones, or have a different sign for them.

Cost conscious people may be sold on features, so having a comprehensive list of the "features" they get by having the inexpensive one built, and the added features they get from the upgrade may be a good way to go. Consumers don't expect to pay the same for cars with upgrade packages as they do for the base model. Having a little white sign with your name on it is a feature, having a little gold sign on it with your name would be an upgraded feature.

Don't take anything for granted - even the fact that it's permitted and inspected is a feature.

Just one way to look at it.


----------



## casey344 (Dec 15, 2005)

*Thank you*

Thank you hdavis ... that's a great perspective I like the white sign / gold sign idea too. 

I decided last night the tiered approach is the direction I need to go in. 

When I explained the 8k difference in our bids to my wife last night she said, "Why do you even offer those features if you're losing jobs because of it?". Sometimes the simplest approach is best and I always find myself over analysing these builds because of my experience. 

The answer seems so obvious but I'm realizing not all clients know or care about these better materials and structural improvements. Just because I'd build my own dock that way doesn't mean everyone will agree to or is capable of paying that premium for a step up. 

I need to work on finding an friendly and easier way to present this to my clientelle without sounding arrogant.


----------



## hdavis (Feb 14, 2012)

Sell yourself first. I'm not saying this is the same as selling cars, but I think you could learn from those sales.

Somewhere in this site there are a some excellent threads on selling / closing, but his is what I found quickly (one call closing):

http://www.contractortalk.com/f12/book-contractors-closing-success-blueprint-170250/

http://www.contractortalk.com/f15/one-meeting-proposals-133228/

http://www.contractortalk.com/f12/one-call-closing-84159/


----------



## casey344 (Dec 15, 2005)

*Under Contract*

I held firm at my 63k price and he decided we were the best fit for his project. He actually had some glowing compliments about how great a salesman he thought I was and commented about how I took the time to really explain the price difference and design a dock that was better than the original design. 

The only "throw-in's" were (6) x $17.00ea. rod holders and the use of a new generator while his house is built. I've been meaning to buy a newer/stronger generator for one of my work boats so I'll put it to good use when he's done borrowing it. He upgraded the decking from Trex Select to Trex Transcend @ $1,500.00 and now wants a price for 385' of shoreline stabilization which may end up costing as much as the dock. 

All in all I think it was a successful sale and I have until the end of this year to start his job so the flexible start-time is a bonus.

Now I feel I have to take care of the guy who referred me. Had he not I wouldn't have even had the opportunity to work with this guy.


----------



## KAP (Feb 19, 2011)

casey344 said:


> I held firm at my 63k price and he decided we were the best fit for his project.


Worth repeating... :clap:

Congrats... :thumbsup:


----------



## Unger.const (Jun 3, 2012)

casey344 said:


> I held firm at my 63k price and he decided we were the best fit for his project. He actually had some glowing compliments about how great a salesman he thought I was and commented about how I took the time to really explain the price difference and design a dock that was better than the original design.
> 
> The only "throw-in's" were (6) x $17.00ea. rod holders and the use of a new generator while his house is built. I've been meaning to buy a newer/stronger generator for one of my work boats so I'll put it to good use when he's done borrowing it. He upgraded the decking from Trex Select to Trex Transcend @ $1,500.00 and now wants a price for 385' of shoreline stabilization which may end up costing as much as the dock.
> 
> ...


So he browbeats you on a couple.thousand. Then launches forward with spending another 50-60k more with you? Why does everything have to be a game?


----------



## KAP (Feb 19, 2011)

Unger.const said:


> So he browbeats you on a couple.thousand. Then launches forward with spending another 50-60k more with you? Why does everything have to be a game?


Don't worry... he'll be asking off money on that one too... :whistling :laughing:


----------



## casey344 (Dec 15, 2005)

Unger.const said:


> So he browbeats you on a couple.thousand. Then launches forward with spending another 50-60k more with you? Why does everything have to be a game?


Yes, this is the second person to do to this recently. This other guy poor mouthed me to death about why he needed the price lowered. 

We're onsite now and he's in the middle of putting a second story on his house, building a new garage and just sent pictures of a used 30k boat he was considering to make sure the boat lift will pick it up. 

I made more concessions with that guy than I should have, just to get the job. No more.


----------

