# im always the high bidder



## soldiermccoy (Sep 8, 2005)

The roofing company that i work thinks that in order to do a roof we have to make big money. which doesnt make it easy when every other guy in town is selling 3 tab 25 yr from 140-160 a square. But we arent allowed to turn a job in any lower than 180 a square. our job cost is around 115 a square. of course we try and set our selfs apart from every other roofer saying our installation and service far exceeds any other company. but in reality its all the same. any one else ever work for a company like this. any ideas or thoughts on the situation. i lose 95% of my bids due to price. i get the same response. my presentation is far more informative and better but price is really the deciding factor. any help would be great


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## Greg Di (Mar 12, 2005)

My advice is to see if the other guys are hiring and move over there. Make your money by selling more jobs at a slightly lower price.

Or, start your own company and hire one of the crews from your present company. I bet they aren't getting paid any more money to install those higher priced squares. Give them each a dollar raise and you have yourself a business.

It may not be super-ethical to steal employees, but it happens all the time unfortunately. Money talks.


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## PipeGuy (Oct 8, 2004)

Greg Di said:


> It may not be super-ethical to steal employees


That's old school dude - like lead pipe and knob and tube wiring. You can only steal property and empoyees don't fall into that classification.


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## mdshunk (Mar 13, 2005)

Objections about price fall into one of these two categories:
1) The objection isn't really about price, and you need to answer the real objection. Find the real objection, and the sale is made. 
2) You failed in your sales presentation to assign proper value to your product, company, and service. The old addage "sell the sizzle and not the steak" comes into play when you're basically selling the same product as the other bidder. You failed to sell the sizzle when your customer comments are that you were "informative". This shows your product knowledge is good, but your sales skills lack. 

Sometimes I borrow a line from Zig Ziglar. "We would rather explain price once than apologize for quality forever."


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## Grumpy (Oct 8, 2003)

The last company I worked for we started out thinking low bids would win us jobs and lots of work would help us grow. WRONG. I started raising my price once my boss and I had a moment of clarity and reallization. Later I usually sold my jobs for MORE than he was asking. Ie: If he wanted $160 a square I usually brought it in at $175. Now I run a roofing company and I am almost always the high bidder. I have at least two crews working every day the past few weeks and enough work in the schedule for two crews to keep working until Thanksgiving. Not bad for being the high bidder.

Learn how to sell on quality, not lowest price. It's really not that hard. Point out what you are going to do and where corners might be cut. Now here is the kicker, since the customer doesn't know squat about roofing you have to explain *WHY* cutting those corners is bad for their building and won't last! Tell the customer about more than just the roof, focus on the things you think are obvious like setup of tarps and a real good cleanup at the end of the job.

I charge about $180 a square for new construction... and I get it. Most guys in my area are about $135 for new construction. Why do I get it? I sell on quality and walk away from cheapos. The point being $180 for a tear off really isn't alot at all. Infact it's cheap for tear off pricing.

Your biggest problem is you are counting other peoples money (your bosses money) and I think you fail to see what really goes into the job above and beyond the labor and materials. Overhead is what makes and breaks a company budget. Overhead is also the hardest to track and predict properly. Overhead is by far the number one reason a company will fail.

Also if you don't believe in what you are selling, and you don't, then you will never be able to sell it. You yourself feel the roof system is overpriced. If you feel that way your customer will too. I personally feel my roof system is underpriced and the only reason I do not charge more is because it would be damned hard to get. 

"My Price is too high? Really? Compared to what?"

"Mr. Customer you say there price is lower? Can I see their bid? Oh look they are doing this and that differently than us. You have to compare apples to apples." (You will ALWAYS find differences)

"Mr. Customer you said I was more informative and better. Don't you think that our whole company philosophy is to be better? Do you think that if the others short cutted you on information in this crucial stage they might short cut you on the quality of your roof? How do you know it's apples to apples if they didn't really inform you of what you were getting?" 

"Mr. Customer what you have to understand if that we price to eat and sleep. What I mean is we have to charge enough that we can feed our families but at the same time we all are moral people with consciences and we have to sleep at night. What that really means is we want to give a price that is fair to us and fair to us. I have to wonder what they are skipping to acheive that low price. Their system CANT be as good! Can I see their estimate?"

"Aren't you worried about what you are NOT getting for that low price?"

"If you think my price is high, give home depot a call. They will be DOUBLE my price and not give you a roof system near as complete as ours."

What ever your compitition is doing you have to do something different even if it is a gimick just to stand out from the crowd. You said you are doing the same and you tell them your product is better but forget telling them it is better tell them why it is better FOR THEM and point out the differences!


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## Grumpy (Oct 8, 2003)

Wait you LOSE 95% of your leads? That means you only close 5%? That means if I gave you 100 leads to run you would only bring me back 5 sales?

What type of closing ratio do the other salesmen at this company acheive?

How many leads per day or week do you run on average?

Do you meet with each and every customer?


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## Grumpy (Oct 8, 2003)

P.S. I closed a job recently, a nice 30 square flat roof, and I was $4,000 higher than the low bidder. I did compare estimates and I did see we were doing a bit more than the other guy but those little extras didn't add up to anything near $4K. The point being it's not impossible to sell on quality.


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## PipeGuy (Oct 8, 2004)

Grumpy said:


> P.S. I closed a job recently, a nice 30 square flat roof, and I was $4,000 higher than the low bidder. I did compare estimates and I did see we were doing a bit more than the other guy but those little extras didn't add up to anything near $4K. The point being it's not impossible to sell on quality.


You're not selling on quality you're selling on your customer's ignorance. You're fortunate that your customers are so uninformed that they can't perceive that you are over-priced (as you noted).


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## AAPaint (Apr 18, 2005)

PipeGuy said:


> You're not selling on quality you're selling on your customer's ignorance. You're fortunate that your customers are so uninformed that they can't perceive that you are over-priced (as you noted).


I don't believe there is such a thing as over priced. If the customer accepts the price and is happy with the work, there is no such thing as over priced. Like selling cars, we would often charge a grand or two OVER retail. Meaning, over the sticker price.....The way that we looked at it is this. A good deal, is only a perception.


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## King of Crown (Oct 12, 2005)

I work with a custom closet company as well, and they are always the highest bid. There is a difference between them and the other companies though. they are always there when they say they will be. their help is experts, and all have been doing it for at least 10 years. they are the cleanest on the site and in personal apearance. they have great skills with the customer, and they have so much business, they dont know what to do.


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## PipeGuy (Oct 8, 2004)

AAPaint said:


> I don't believe there is such a thing as over priced. If the customer accepts the price and is happy with the work, there is no such thing as over priced.


Before I agree (which, at first blush, I'm probably inclined to do) let me ask you this; If you went out and got 3 or 4 bids to replace your roof, found they ranged between $7K and $15, hired someone at $11k and subsequently saw the $7K guy do a great job on your neighbors roof, would you stil be happy about your decision? Would you think you paid too much?
What if you stopped at a paint store a couple towns away and found them selling the same paint you usually buy for 10% less? Would that make your usual vendor 'overpriced'? 

After re-reading Grumpy's post I realize that he didn't say he was the highest bid - just higher than the lowest. To that end my 'overpriced' observation may have been inappropriate.


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## Mike Finley (Apr 28, 2004)

soldiermccoy said:


> The roofing company that i work thinks that in order to do a roof we have to make big money. which doesnt make it easy when every other guy in town is selling 3 tab 25 yr from 140-160 a square. But we arent allowed to turn a job in any lower than 180 a square. our job cost is around 115 a square. of course we try and set our selfs apart from every other roofer saying our installation and service far exceeds any other company. but in reality its all the same. any one else ever work for a company like this. any ideas or thoughts on the situation. i lose 95% of my bids due to price. i get the same response. my presentation is far more informative and better but price is really the deciding factor. any help would be great


I'm curious since the profit margin is so much higher do you have a pay plan that has the potential to pay you much higher than if you were working at any of the other roofing companies? If that is the case it is certainly a motive to sticking where you are and learning how to take advantage of it. If not then if I was in your shoes I would be more motivated to work somewhere else. You will probably find yourself doing really well at another company since even though you aren't having great success where you are, I'm betting you would find your experience not selling on price alone helping you out quite a bit at your new company where I'm betting a lot of the guys there are really pathetic salesman because they never had to learn to sell on anything but being the lower price.

Personally a 5% closing ratio isn't acceptable no matter how you look at it. I can't believe your company lets you burn through that much money/customers. Meaning, those leads aren't free that you are getting in front of, they are spending a ton of money to see 95% of it thrown away in your case. To me it is ridiculous that nobody at your company has taken the time to help you grow as a salesperson with education and training.


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## kenvest (Sep 27, 2005)

being outrageously higher in price will catch up to you. it's basic economic theory. nothing wrong with being a few bucks higher and leaving the jobsite cleaner after having installed a better product but taggin on and extra 10% just because will bite you before its all over with.......


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## Mike Finley (Apr 28, 2004)

kenvest said:


> being outrageously higher in price will catch up to you. it's basic economic theory. nothing wrong with being a few bucks higher and leaving the jobsite cleaner after having installed a better product but taggin on and extra 10% just because will bite you before its all over with.......





> You're not selling on quality you're selling on your customer's ignorance. You're fortunate that your customers are so uninformed that they can't perceive that you are over-priced (as you noted).


I can't understand the thinking in these replies. 

Being the highest priced outfit in town is not detrimental, isn't the kiss of death and there is nothing wrong with it.

Think about it - somebody will be the highest priced guy in town right?

The only danger is if you get into what is seen as price gouging such as taking advantage of the public during a crisis, or you start getting selective with your pricing such as targeting the elderly.

Other than that you can be consistently the highest priced guy in town as long as your company is able to establish in the publics mind that you are also the *best value*. The market will establish the value and keep you in business or not. You could go out and quote roofing @ $1000 a square but can you a) present enough value to justify the price, b) find enough customers willing to pay for it? 

There is an equilibrium price where the law of diminishing returns will cap how much you can charge no matter how much value you present. 

For every guy that you look at and say "Man how does he charge so much for his services and still stay in business?" there is somebody you know who you say "Man, how does he charge so little for his services and still stay in business?"

The difference is the guy who doesn't know his own worth or value, you think is a poor business person who doesn't know his true expenses or doesn't have the sense to charge reasonable rates, so doesn't that logically make the guy charging the most the better business man, who does know his true expenses, he does know what a real profit is, etc...?


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## Mike Finley (Apr 28, 2004)

kenvest said:


> being outrageously higher in price will catch up to you. it's basic economic theory. nothing wrong with being a few bucks higher and leaving the jobsite cleaner after having installed a better product but taggin on and extra 10% just because will bite you before its all over with.......


I simply don't understand how you can assign a percentage that caps how much value a company can present to their customers.

Look only at the franchised handyman business to see how short-sighted this thinking is by artificially capping yourself.

*There are individual handymen out there charging $15 an hour.*

*There are franchised handymen services that are charging $90 an hour.*

Thats over a 565% difference.


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## kenvest (Sep 27, 2005)

theres nothing wrong with being the highest priced guy in town as long as you're providing the quality of product thats worth that much more than the next guy.

this doesn't mean that your average guy who buys 1 or 2 roofs in a lifetime won't do business with you at artificially high prices because we know they will. 

but building repeat, referal and steady work in a marketplace of professionals around a pricing structure thats 10% high "just because" might be difficult in the long run. 

i don't know about you, but i like a steady flow of consistent work instead of depending on the stray homeowner or two to put food on the table.


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## Mike Finley (Apr 28, 2004)

kenvest said:


> but building repeat, referral and steady work in a marketplace of professionals around a pricing structure thats 10% high "just because" might be difficult in the long run.
> 
> i don't know about you, but i like a steady flow of consistent work instead of depending on the stray homeowner or two to put food on the table.


The only agreement I have is if you are saying to bump your prices inconsistently based on circumstances that seem like you can take advantage of, that I don't agree with.

But a consistent higher price is not detrimental if you are creating perceived value. I say perceived because that is all it is. If a company is able to charge 1000% more than the next guy because they have radio commercials that stress that they will show up on time no matter what, and customers want to buy their service over the next guys because having somebody show up on time is the most important thing for them, then this is simply perceived value. All value is a perception based on the customer personal feelings on what is important to them.

*You seem to be hung up on believing value is concrete, such as how much lumber you put into a project that a customer can walk over and touch.*, and that the prices you charge should only be based on these things.

I think you are confusing the higher price basing it on "just because" as being wrong.

Defining charging more as "just because" means you think you only deserve some artificially set percentage of profit. Did you read in a book somewhere that you only deserve a 5, 10, 15 or 20% profit?

You also say you want a consistent flow of work, not a few here and there at a higher percentage of profit.

That is not what we are talking about. We are talking about consistently higher profits, meaning your business operates consistently being higher in price than anybody else, this goes back to what I said that I don't agree with bumping the price here and there to take advantage of somebody.

Don't confuse a hit and miss strategy of higher prices now and then, I'm talking about being higher all the time. You have already categorized this as not working for *you* because you said you want a consistent flow of work, but what I am saying is the consistent flow has to be a given. If not you aren't creating the value in the publics mind to pay your higher prices.

There is no one with out the other here, you have to have a consistent flow of work, but it is consistently at a higher percentage of profit. 

And I absolutely see no detriment to charging more stopping you from building repeat and referral business. In fact I see it as just the opposite. 

_In sales there is a truism that people that pay the most for something are the most satisfied with it._

Before you jump all over that you have to understand the background of it. It takes into account not ripping somebody off one time by fraud or trickery, that's not what it means, it means that a person who whittles somebody down to such a low price is also whittling down the service that comes with it. Everybody knows when you go to a no frill service you don't expect somebody to wait on you hand and foot. The opposite is that when you pay more for a service there is more profit in the deal and the company will be able to do more for you, therefore you will be the most satisfied. (Of course you are essentially paying for this extra service right out of your pocket, but perception is everything.)

When you can find the equilibrium where you are offering customers a perceived high value for the higher prices you charge you get the best of everything. You will have the most satisfied customers, because you are able to spend the extra time and money to satisfy them, you get great word of mouth because your customers are satisfied, you also keep getting more of the customers you want. (People don't walk into a Ferrari store expecting to pay $14,000 for a new car, Ferrari keeps getting customers who are ready to spend $200,000 for a car, they don't spend all day qualifying customers with $14,000 budgets, they keep getting the same caliber of customer coming to them, the difference is there customers are also shopping Porche and Lambrigini), you also get to be more profitable and therefore more happy in your home life, the wife gets to go shopping more and the family gets to go on vacation more.

Just look at those handymen.


> There are individual handymen out there charging $15 an hour.
> 
> There are franchised handymen services that are charging $90 an hour.


Is the difference between these two companies doing exactly the same job the materials going into it the job? No way, the difference is the perception of value in the customers mind and most of that is connected to service, it is not a predetermined percentage of profit read somewhere.


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## Grumpy (Oct 8, 2003)

PipeGuy said:


> You're not selling on quality you're selling on your customer's ignorance. You're fortunate that your customers are so uninformed that they can't perceive that you are over-priced (as you noted).


I wasn't the highest bidder and I provided the most complete estimate detailing scope of work etc. The buy is an engineer who has turned GC and is converting a large apartment building he has owned for years into condominiums to sell. Calling him uneducated or ignorant is far from the truth.

P.S. as I noted I said I am under priced no over priced. You are mistaken, and if you are going to quote me please quote me accurately.


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## kenvest (Sep 27, 2005)

its not about what i feel i deserve, its about what i feel the market can and will sustain in the area i'm in. a true professional is going to percieve their own value and part of the true professionals perception is monetary value versus quality of execution - to them, value is concrete because some accountant told them it needed to be in order for the numbers to work. these guys won't pay you more and they, in my area, are the ones handing out the steady flow of work, who is the one i'd rather work with.

thats not to say they are the cheapest prick aholes who've whittled the bid down to pennies because they aren't. they expect a quality job and a reasonable price and they should because its a roof not the space shuttle. 

its fairly easy to assign value on a roof and you can consistenly charge more than everyone else if you are the cleanest, neatest, use good materials and supply good customer service for the paper pushers. that isn't perceived value that is value.

i agree with you on the truism of the most satisfied are the ones who paid the most....thats 100% true in the world of personal purchasing for a select membership of our population but in the business world, which is where my point of reference is coming from, there's too many people involved in the decision making process for that to hold water.

i would choose to work the more professional, consitent flow of work than the hit and run type of stuff and in that environment, perception of value is mostly mandated by the buyer (read accoutants) than the seller.


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## Paul Staub (Feb 21, 2005)

> "If you think my price is high, give home depot a call. They will be DOUBLE my price and not give you a roof system near as complete as ours."



Selling is 100% about perceived value. Grumpy states that his company has a better roof for half the price. This may be a fact.

Despite that the Chicago branch of Home Depot's Installation Services has sold $3.7 million worth of roofing this year so far.

They are out selling at a huge price yet millions of dollars are being sold. 

If your customers see you as better for whatever reason whether it be true or not they will buy from you. Price means absolutely nothing and until you learn that you will not sell.


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