Sorry Charlie: If You Wouldn't Have Told Me Your Price Was High, You'd Have the Job
Why do contractors bid work, and then slowly sabotage their chances of getting the work by telling the prospective customer, "My price is high, but...?" I have not only made these mistakes myself; it's the first thing many contractors tell their customers when trying to obtain work.
Several years ago, my equipment company, EZ Grout, sponsored a golf outing to promote our equipment. A well-known contractor and potential new customer asked me for pricing on the mud tubs I had sitting on my truck.
"They are $400 each," I said. Without saying a word, the contractor put two fingers in the air, and then pointed back at himself, implying that he would take two of them. I was thrilled; it was a sale – good sale – to a good customer. But instead of confirming the order and closing the deal, I fired two torpedoes into it.
My thought process was honorable. I wanted to make him feel good about his purchase. I said, "These mud tubs cost a lot more than the others on the market, but the steel in these is twice as thick."
I should have recognized the look of reluctance growing in his eyes, but I continued, "It's worth the extra cost, that's for sure. They last longer than the competition's." My new customer and well-known contractor slowly rolled his two fingers in, and put his hand down by his side.
Did I just talk him into canceling that order?" I thought to myself. "Or, will he come back and finish the order later today?"
He never asked me for a price comparison to my competitor's tubs. He simply wanted to purchase two, because my company was sponsoring the outing, he knew me, and liked the looks of the tubs. I should have taken the order and shut up. Then, let him discover the benefits of my mud tubs when he got them on his jobsite. Instead, when I had the opportunity to close the customer, I started talking him out of it.
Here's an example of how this self-sabotage goes on all the time in the construction world.
Charlie (that's what we'll call the contractor in this article) gives Betty (the customer) a price to do the work on her project. Betty likes Charlie and his price, but the project is still several weeks out with some examination on the total scope of work. So, Betty thanks Charlie and says she will be in touch.
Three days later, Charlie calls to follow up. During their conversation, Charlie spills his guts. Projecting that one of his competitors (who we will refer to as Joe) might outbid him, Charlie tells Betty that his price will be higher than Joe's. Then, he goes on to explain that it will be worth the higher price, because the quality of work his company does will be superior to Joes.
First of all, Charlie should have qualified the customer. He should have asked what was most important: price, quality, deadline, etc. Beyond not asking those important questions, he made matters worse by projecting his fears and insecurities into the contractor-customer relationship.
Here are the facts: Betty wasn't even aware that Charlie's price was so high, until he told her. Fire torpedo No. 1. She now knows the name of a less expensive competitor. Fire torpedo No. 2. While quality and timeline are important, the budget is the general contractor's primary concern for this project. Fire torpedo No. 3. Grab your life vests fellas, she's going down.
But wait! There is still life for Charlie. After all, he has only drilled this potential job with three torpedoes, and Betty likes him and the quality of his work. He may still get this job.
A few more days go by. Salivating over this project that he has good money on and that fits into his schedule perfectly, Charlie calls Betty again. "How's my number? Are we still in the running?" he asks. Betty, smarter now, gives him no information or even a hint on who she plans to use.
Charlie starts talking again. "My price will be higher than Willie's (another competitor Charlie thinks might be bidding on the job). However, Willie doesn''t always complete his projects on time, and we are always on schedule." Fire torpedoes No. 4 and 5. Charlie just promoted two competitors for the job who were not even considered, and has told the customer that both of them will do the job at a lesser price. The potential sale is sunk.
When selling, you need to ask questions and then listen to the customer. If you don't know what he or she wants, ask more questions. Don't get me wrong: If a customer asks why your price is so high, you should be ready to justify it. But assure the customer tells you your price is high, and not the other way around.