# Are Our Services Worth What We Charge?



## CarpenterSFO (Dec 12, 2012)

hdavis said:


> Just because your costs are higher than someone else's that doesn't make your services to the HO more valuable. At most, insurance, etc may be a qualifying point, many people just don't see the value in it.


All of my condo customers, and about half of my single-family home customers, require proof of liability and workers comp.


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## Calidecks (Nov 19, 2011)

I never ask for a budget, I have to make a trip out to the job for a meeting anyway, I might as well measure and give a price. Getting the budget doesn't save me anything. The only way it could, would be if I asked it on the phone before the initial meeting. I'm pretty sure I wouldn't get too many jobs if one of the first questions I asked before meeting the customer was "how much do you have to spend".


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## tedanderson (May 19, 2010)

jb4211 said:


> I ask what their budget is to save me the time of estimating a job they can't or don't want to afford. If she would have told me her budget at the first meeting, it would've saved us both a lot of time.


Granted there are people who simply don't know what this stuff costs and while it may be wise to pre-qualify your customer, don't be so quick to "disqualify" your customer.

It's quite common that people go into a showroom planning on buying one thing and they walk out buying something completely different. I've done that myself with apartments, houses, cars, appliances, vacation packages, etc.

Every buying decision is usually an emotional one and you have to get the customer out of their logical mindset and into their emotional mindset. They don't want a deck because of the price. They don't want a deck because it increases the value of their home. They want a deck because they want to entertain their friends and family. And when they are out on that new deck, they are having fun and not thinking anything else about the price. In fact some people will even BRAG about how much they paid so that they boast about how well they are doing financially.


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## Stephen H (Feb 18, 2011)

CarpenterSFO said:


> All of my condo customers, and about half of my single-family home customers, require proof of liability and workers comp.


 bob,
in almost 30 years----- I doubt I have had more than 5 potential customers ask about a WC cert.

for years I used to put a copy of our WC cert. and our liability ins. Cert. in our presentation folder.
People just don't care and I haven't bothered to include one in years.

Stephen


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## Stephen H (Feb 18, 2011)

one thing I have noticed is--- self confidence really helps with sales.

A couple of folks here have mentioned working up proposals---and then cutting the price before they even present it to the prospect.

I think that's a problem with confidence----and what I notice is---- I am WAAAAAAAAY more confident ,sales-wise,---with a backlog of work and 4 proposals scheduled to write up that day and the knowledge that when I get back to the office there will be requests for 3-4 more proposals to write and so forth..........

think about it----are you going to a first meeting with a prospect and you are thinking " I really need this job"?

where are your leads coming from? Are you proudly operating on a "word of mouth" reputation?--- but you don't have much backlog AND you don't have a stack of proposals ready to write up?????
don't get me wrong---WOM is GREAT--- but it doesn't always get the job done---and those calls don't always ring in when you need them to.

another thing----- My sales ratio went up quite a bit when I basically put down my tools and stepped back a bit from production.
Instead of making a sales call at 7:00 PM when I am tired,sunburnt, dehydrated,and filthy from a day spent roof top-------------------- instead of making a sales call on Saturday morning when in the back of my mind I am resentful of missing a family event..........

I am now making those calls at more like 10:00 AM, when I am clean, rested,cool,dry,focused,attentive----and I am never in a position where I am thinking" I really need THIS job"----

and statistically I figure I am going to get 1-2 of the other 3 proposals waiting for me in my briefcase and that there will be MORE waiting for me at the end of the day......

Best wishes all,
stephen


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## summithomeinc (Jan 3, 2011)

I just tell myself that just because I can't afford the service I am offering doesn't mean my customer can't afford it. I have to constantly remind myself that most of my customers make alot more money than I do. Definitely set a price and stick to it. 90% of the time when I've lowered a price after the job is done the original price was exactly what I should have charged to meet my goals for profit.


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## BamBamm5144 (Jul 12, 2008)

I very rarely adjust my price without reducing the scope of work.

It does help to know that you're quoting out three or four projects a day so you don't care as much if you don't get one of them.

Also, seems like every time I used to lower a bid to get a job, the day I started the job that I lowered my bid on is the day I would get calls to go ahead with more profitable projects.


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## FrankSmith (Feb 21, 2013)

I have found that when I am working on a proposal I get stressed about how much it costs and what the customer will think. Once I have finished it doesn't bother me a bit. It doesn't even bother me if a customer says "that was a lot more than we thought" or "you where a lot higher than another bid". I usually say something like "if you found some one you trust who can do the work we discuses for you at that price you should do it." Some of those still come in some don't.

The point is the customer reaction isn't as scary in real life as I make it out to be while pricing. Also if I contact some one to do work on a project or at one of my building I would be embarrassed to insinuate the price is to high. I try to keep that in mind when a customer somehow feels fine bringing it up.


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## tedanderson (May 19, 2010)

I think that it's also important to keep in mind that if they balk over the price, that doesn't necessarily mean that aren't going to pay it. Given all of the things that we buy in spite of not liking the price, fixing up someone's house isn't exactly the worse thing you can do to someone.


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## Inner10 (Mar 12, 2009)

Californiadecks said:


> I never ask for a budget, I have to make a trip out to the job for a meeting anyway, I might as well measure and give a price. Getting the budget doesn't save me anything. The only way it could, would be if I asked it on the phone before the initial meeting. I'm pretty sure I wouldn't get too many jobs if one of the first questions I asked before meeting the customer was "how much do you have to spend".


True for the decking or roofing industry, but us in custom install have to design a different product for each job so budget is paramount.



Stephen H said:


> bob,
> in almost 30 years----- I doubt I have had more than 5 potential customers ask about a WC cert.
> 
> for years I used to put a copy of our WC cert. and our liability ins. Cert. in our presentation folder.
> ...


Do some commercial work, you have to give WC clearance and insurance cert on every job. Most require 10 mil aggregate too.



BamBamm5144 said:


> I very rarely adjust my price without reducing the scope of work.
> 
> It does help to know that you're quoting out three or four projects a day so you don't care as much if you don't get one of them.
> 
> Also, seems like every time I used to lower a bid to get a job, the day I started the job that I lowered my bid on is the day I would get calls to go ahead with more profitable projects.


Pricing jobs differently for different people is price discrimination. It's what phone companies do, those that complain less pay the highest price. It give the best deals to our most disliked clients and I have no interest in playing that game.

Now I'm sure it would maximize my revenue, but if nice client A ever compares his price to ******* B I don't think I'd be getting much repeat business from A.


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## BamBamm5144 (Jul 12, 2008)

Inner10 said:


> Pricing jobs differently for different people is price discrimination. It's what phone companies do, those that complain less pay the highest price. It give the best deals to our most disliked clients and I have no interest in playing that game.
> 
> Now I'm sure it would maximize my revenue, but if nice client A ever compares his price to ******* B I don't think I'd be getting much repeat business from A.


Not sure how you got that from what I just said...


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## fast fred (Sep 26, 2008)

Stephen H said:


> instead of making a sales call on Saturday morning when in the back of my mind I am resentful of missing a family event..........
> 
> I am now making those calls at more like 10:00 AM, when I am clean, rested,cool,dry,focused,attentive----and I am never in a position where I am thinking" I really need THIS job"----


exactly, I always make my appt for the morning, so I'm fresh, ready to go, and on top of things, although where I live i end up visiting people on sat and sun, it's just due to circumstances of 2nd homeowners and weekend people, I don't mind

I've had to do a couple late afternoon weekend appts which suck cause I've been smoking weed all day and skiing or riding my bike, you end up going on there drained and tired, its a great way to tell if a customer has it or not, if they are excited and full of information and ideas you can feed off that and get worked up, if they don't have a clue and are wasting your time, you just drag on clawing at the front door hoping to escape

everyone says it here raise your prices raise your prices raise your prices, I"m finally in that top 25% in my market for cost, wouldn't look back, lose lots of jobs because i'm "too expensive" now, but who cares I'm making money and that is the only reason I'm in business, I'm not running my own business as a hobby, I'm not running a charity, i bust my hump to make money and live a comfortable life


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## Inner10 (Mar 12, 2009)

BamBamm5144 said:


> Not sure how you got that from what I just said...


I don't know, after the 3rd quote I forgot who I quoted or what I was typing.


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## SamM (Dec 13, 2009)

Every time I lower my price pre-presentation I find the same as everyone see here: the first number was right, and would've made the proper income for the job. I'm doing a paint job right now that I estimated at 60 hours, but quoted 50. I'll finishing up tomorrow and I'll come in at 58 hours.

I've been working a lot on my sales skills this year. I would recommend that anyone who wants to get better on sales start with Dale Carnegie's classic "How to win friends and influence people". A lot of good advice in that one.


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## hdavis (Feb 14, 2012)

Anderson said:


> They will when someone gets hurt or something gets broken.


True, but that's after the contract is signed. Lots of people wouldn't have insurance on their own cars if they weren't required to have it.
Don't get me wrong, it can be seen to have value to some HOs, but in terms of where you're delivering value, it's pretty low on the list.

Fundamentally, I think if someone is cutting corners in their business to make a profit and stay in business, it's just a matter of time before they cut corners in what they deliver. The first step in going down the tubes is usually cutting corners where the customer won't really notice it.


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## hdavis (Feb 14, 2012)

CarpenterSFO said:


> All of my condo customers, and about half of my single-family home customers, require proof of liability and workers comp.


Yup, basic qualification for doing the job. You aren't using it as a big value selling point.


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## pcplumber (Oct 12, 2008)

TNTSERVICES said:


> That's not estimating that's quoting. I never give a quote before an estimate. It saves me so much time. Mr or Mrs soandso I estimate your job will be from $x - $y. Are these numbers within your budget?
> 
> And you can lose a lot on jobs you don't get. Count the time you took to get there, discuss the project, estimate the project and deliver the estimate.


I virtually never quote a ballpark price because customer's always expect the lowest price and they always turn to ice when they hear the higher price.

I never ask what the customer's budget is regardless of the price of the job. I only ask what the customer wants and then I will calculate the cost and throw them a price. I built many kitchens that were more than $100k and never asked their budget in advance of quoting a final price.

I told the story a few times about when I took a customer to Home Expo (owned by Home Depot) to look at kitchens. A salesman asked what my customer's budget was and she said $35,000. The salesman literally laughed (very rude). She asked what the average kitchen cost was and he said something like $60,000. By the time her kitchen was completed the actual cost (not what I charged) was more than $100k. My point is; people have a budget in their brain, but that price is not always limited to what the customer is willing to pay. 

I agree 100% with the first post. It was very well-written.

The only things I would like to add about being afraid to bid a high price is we constantly raise our prices to push the envelope and we try to justify having higher prices by trying to have the appearance that we are offering the best service, products and present the image that if the customer goes with us there is more of a guarantee that there will be no hassles, delays, etc. Every customer already knows the horror stories about bad contractors and customers are willing to pay more money rather than taking a chance. 

I did several minor studies regarding higher and lower prices for identical products and services and I always found that the same number of people will not buy from you regardless of your price. For example, I know plumbers who sell water heaters for $850, others who sell them for $1250 and both contractors get the same percent of people who won't buy. Your price can be too low for a kitchen remodel, too high, the customer doesn't do the job, after all, or they just don't want to do business with you. As someone stated, it turns my stomach when people ask for a discount because I don't believe that customers give their bosses discounts from their paychecks. But...everyone wants to be a winner and I always leave a little wiggle room. When you give a discount you have to give it with a good valid reason i.e. you have a crew that just finished a job and you can knock off a little because you won't have to pay them for idle time, or whatever.

In 1972, I worked for a contractor who was booked for 1 to 2 years. He was getting $18k to change a bathtub, sink, toilet, tile and paint. In today's money that would be about $35,000. Like the first post in this thread, the contractor had terrific sales people. Every other contractor was getting less than $5,000 at the time.


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## TNTRenovate (Aug 19, 2010)

pcplumber said:


> I virtually never quote a ballpark price because customer's always expect the lowest price and they always turn to ice when they hear the higher price.
> 
> I never ask what the customer's budget is regardless of the price of the job. I only ask what the customer wants and then I will calculate the cost and throw them a price. I built many kitchens that were more than $100k and never asked their budget in advance of quoting a final price.
> 
> ...


I love reading fiction. The greatest thing about ct is there are no late fines.


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## CarpenterSFO (Dec 12, 2012)

hdavis said:


> Yup, basic qualification for doing the job. You aren't using it as a big value selling point.


I sell pretty hard on being a legal business, and explaining how my license and insurance provide real value to them. And those numbers are for customers under contract, not leads or prospects. Most raw leads are looking for someone unlicensed and illegal.


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## CarpenterSFO (Dec 12, 2012)

A dedicated sales professional often has a better idea of the profitability of a project because he or she isn't involved in the execution of the work. A technique for micro- or single-man operations (I'm a tiny operation) is to bid each job as if you were hiring someone else to do the work - either employees or subs. Quote the labor costs with fully-loaded labor for trades and supervision, or get quotes from subs. That's where your competition's costs are, right? Now, add your gross margin, same as that guy will. You are now price-competitive with that guy. Is that price higher than your quote would normally be? If it is, then you should consider whether or not you are unnecessarily giving away profitability. Should you charge a lower price, simply because you're a single-man operation? I don't think so.

Subbing out more work helped me raise my prices. When you're paying a sub, or quoting a job using subs, the facts are clear - you will be paying $X to get the work done, and if you don't get $X back plus your supervision and margin, you will flat out be losing money or not making any.


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## avenge (Sep 25, 2008)

TNTSERVICES said:


> I love reading fiction. The greatest thing about ct is there are no late fines.


Ya but the library would give us the benefit of only being open a limited amount of hours. Maybe CT should implement a time limit, if you're not done typing your time expires and you have to start over.


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## spinsy (Jan 6, 2015)

Good thread. This has stuck in my mind ever since a- at the time- potential customer said it to me years ago. I gave him a price to do a roofing job he required. He replied, " you're the most expensive quote I've had. But I want you to do the work. I'll soon forget about the extra money but I won't forget about a **** job in a hurry". I still ponder over that today


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## Tom M (Jan 3, 2007)

There is more to it than sales pitch. As a whole your area matters. If you read remodeling magazine and the "cost verse value" reports. You will see some areas cost more to build than the average of the country, others less. I noticed San Francisco building costs were high but I was surprised that the cost was nearly all recovered by the customer where as Mid Atlantic area cost were nearly as high but the customer recovered 20% less.


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## JBM (Mar 31, 2011)

I found the quickest way to raise your prices and increase your closing rate is not to need the work. The best way to do that is to either train yourself to act like you dont need the work or to have a method of bringing in a crap ton of leads. 

People love to hire the guy who is unavailable.


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## hdavis (Feb 14, 2012)

Back in boom times, I knew some contractors would price a job so the cost was comparable to the increase in value for the property.


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## eastend (Jan 24, 2006)

isn't the socio-economic strata of your prospective client a major factor?

I doubt if you can sell many 100K kitchens to folks that can only afford a 20K redo- not matter how great a salesperson you are.

As a business , you need to determine what is costs you to provide the level of craftsmanship and service you aspire to, plus profit, and market to those clients that would be receptive to your sales pitch.

I think your pricing should be driven by what your costs and needs are, not just any client's ability to pay.

There are folks that are able to afford a Honda Civic, and there are folks that can get a top-of-the-line Benz.They may be both hard working sincere people, maybe with different priorities, so I'm not even saying one is better than the other. But marketing your services to them call for different strategies.


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## mrcharles (Sep 27, 2011)

avenge said:


> This is my sales tactic "Take it or leave it, that's my price regardless of what your income or budget is"



I stick to my guns with the actual price, but offer scope reductions, and value engineered design ideas. I will be helpful in working with their budget, but not by hurting my pocketbook. I find this to be the best way to handle people shopping for cost. If you go lower on your price than people think they would have been overpaying and either wonder how much lower they could get it for, or will expect the same thing next time.


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## mrcharles (Sep 27, 2011)

hdavis said:


> Back in boom times, I knew some contractors would price a job so the cost was comparable to the increase in value for the property.



Every job would be a loser now.


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## csv (Aug 18, 2009)

While working up a bid, I think dang that is expensive. I go back through and triple check everything. I then tell myself it is, what it is. Once I have delivered the proposal, I won't cut anything off the bottom line without cutting something above. To the OP, good for you, getting a skilled salesman!


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## tedanderson (May 19, 2010)

eastend said:


> isn't the socio-economic strata of your prospective client a major factor?


It is indeed. :thumbsup: But if they are looking for gold for the price of paper, I am still going to quote them the gold price. If they come back with a price objection, I can work with them because 9 times out of 10 they've already thought about what they are willing to settle for if they can't have the whole dream.


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## KAP (Feb 19, 2011)

tedanderson said:


> It is indeed. :thumbsup: But if they are looking for gold for the price of paper, I am still going to quote them the gold price. If they come back with a price objection, I can work with them because 9 times out of 10 they've already thought about what they are willing to settle for if they can't have the whole dream.


There's always gold leaf "paper"... :laughing:

What we tell clients when we first meet them that we are not going to try to "sell" them. Who we are as a company and the price we offer will either make sense or it won't. If we can't find a way to make the numbers work, then we part friends, but at least you'll have the confidence in knowing that you don't have to worry about being "sold" or about fake discounts, raising the price to only lower it again to give you the illusion you are getting a "good deal" to try and entice you to buy. You can feel confident in the final investment because we know our prices, we've been doing this for decades and we just don't pull numbers out of the air (and that's when we pull out our price list). Here is something that is sorely lacking in our industry. Most times you don't know whether the price you are getting is a real price or one that is based on how much the contractor needs to make up from the last project where they lost money robbing Pater to pay Paul, and most customers are worried, rightly so, they are going to get stuck in that cycle. We practice pricing integrity, so you can have confidence that we'll give you what they ask for and the price will come from this list which covers you as a customer beyond the purchase. Don't you wish everyone did business like that? If we need to make adjustments to accommodate your budget, we have alternative products that we can use that make that happen if need be (setting up, if you want it for less, it's not coming out of my pocket)...

In pre-qualifying, when a prospect asks how much it will cost, we say *"Mrs. Jones, for this type of project most people fall into three categories of budget. We have customers who want the no-frills basic job, which ranges from $x to $X, then we have customers who want some frills, some of the options they see in magazines, but don't have an unlimited budget, and this ranges from $X to $X, and then we have those with an unlimited budget and they just want what they want, which ranges from $X and up... Which pricing range do you think your tastes and budget fit most comfortably in?"*

Most are going to choose the middle... so you go from there...

Anytime you lower your price without the customer giving something up in the process, all you are doing is inviting the question "how much more of a discount is there for me to ask for?"...

The hardest thing IMHO to learn in this business is that not everyone is your customer... if they can't afford what you need to charge to feed your family, then they are not your customer...

Cause all your other suppliers expect to be paid to feed their family...

And they're retail... 

.


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## PerfectCntng (Jan 13, 2015)

Damn customers looking for deals in the winter.... I saw we charge more to work in the winter. Lol.


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## BamBamm5144 (Jul 12, 2008)

PerfectCntng said:


> Damn customers looking for deals in the winter.... I saw we charge more to work in the winter. Lol.


I get that fairly frequently since we do roof work. When people ask I have to explain its actually harder for us to work in winter.


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## jb4211 (Jul 13, 2010)

PerfectCntng said:


> Damn customers looking for deals in the winter.... I saw we charge more to work in the winter. Lol.


Consider yourself lucky, I have customers that always look for deals regardless of the season. Fukrs.lol


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## PerfectCntng (Jan 13, 2015)

BamBamm5144 said:


> I get that fairly frequently since we do roof work. When people ask I have to explain its actually harder for us to work in winter.


Go Green Bay !!! Lol


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## Creter (Oct 13, 2009)

KAP said:


> There's always gold leaf "paper"... :laughing:
> 
> What we tell clients when we first meet them that we are not going to try to "sell" them. Who we are as a company and the price we offer will either make sense or it won't. If we can't find a way to make the numbers work, then we part friends, but at least you'll have the confidence in knowing that you don't have to worry about being "sold" or about fake discounts, raising the price to only lower it again to give you the illusion you are getting a "good deal" to try and entice you to buy. You can feel confident in the final investment because we know our prices, we've been doing this for decades and we just don't pull numbers out of the air (and that's when we pull out our price list). Here is something that is sorely lacking in our industry. Most times you don't know whether the price you are getting is a real price or one that is based on how much the contractor needs to make up from the last project where they lost money robbing Pater to pay Paul, and most customers are worried, rightly so, they are going to get stuck in that cycle. We practice pricing integrity, so you can have confidence that we'll give you what they ask for and the price will come from this list which covers you as a customer beyond the purchase. Don't you wish everyone did business like that? If we need to make adjustments to accommodate your budget, we have alternative products that we can use that make that happen if need be (setting up, if you want it for less, it's not coming out of my pocket)...
> 
> ...


Perfectly stated Kap


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## Sixpack324 (Feb 21, 2015)

JBM said:


> I found the quickest way to raise your prices and increase your closing rate is not to need the work....


I've found this to be almost 100% true. When we're really busy, I don't always have the time to spend with each sale that I should. When I am in a hurry and I have the "take-it-or-leave-it-because-I-gotta-go" attitude, my closing percentages go up.



mrcharles said:


> I stick to my guns with the actual price, but offer scope reductions, and value engineered design ideas. I will be helpful in working with their budget, but not by hurting my pocketbook.......


I do this too. I tell my salesmen/project managers all the time "Just because they can't afford it doesn't mean we should buy it for them!"



KAP said:


> ......In pre-qualifying, when a prospect asks how much it will cost, we say "Mrs. Jones, for this type of project most people fall into three categories of budget. We have customers who want the no-frills basic job, which ranges from $x to $X, then we have customers who want some frills, some of the options they see in magazines, but don't have an unlimited budget, and this ranges from $X to $X, and then we have those with an unlimited budget and they just want what they want, which ranges from $X and up... Which pricing range do you think your tastes and budget fit most comfortably in?"...


I like this approach and am going to start using it.


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## tedanderson (May 19, 2010)

PerfectCntng said:


> Damn customers looking for deals in the winter.... I saw we charge more to work in the winter. Lol.


There is a roofing company in my area that's advertising on this platform. The voice actor is portraying himself as the owner of the company saying, "I need to keep my guys busy so I'm willing to take a loss on a new roof... passing the savings on to you!"



KAP said:


> In pre-qualifying, when a prospect asks how much it will cost, we say *"Mrs. Jones, for this type of project most people fall into three categories of budget. *


*

This is how my uncle ran his real estate company. Typically when he found the right house for the client he would first take them to a house that was smaller than what they needed and completely run down and beyond "fixer-upper" status. Then we would take them to a house that was very big and very nice but way over their budget. Then he would take them to the house that was "just right" and they signed the deal almost every time. 

Any time that they didn't sign, it was either because he had to do more fact finding or they were simply not his customer.

It's even the reason why they have fully loaded demos on car dealership lots. Surely they'll eventually sell that car but it's really designed to get most customers to drive away with a car that has the moderately equipped option package that most people get.*


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