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If Everything Is The Same, Price Is The Deciding Factor!

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Kenny Chapman recently presented an outstanding live webinar to our Advantage Members. During his presentation he made the following statement, “If everything is the same, price is the deciding factor. If nothing is the same, price is never the deciding factor.”

I am going to give you a moment to read that statement again and then encourage you to think about the ramifications a bit as you ponder how you sell products and services.

What kinds of products are sold on Amazon? Commodity items. Why do millions of people buy on Amazon? Since the item they desire to purchase is a commodity item the deciding factor is price!  Since Amazon has been around for many years it has established the reputation of being the “least expensive” place to buy an item online. If you happen to be a Prime Member, most items are free shipping as well. If you want to physically purchase an item, based on price, you go to Walmart. If you want to buy online you go to Amazon, right? Again, why? “If everything is the same, price is the deciding factor.”

Now let’s think about what your company offers. If you are an HVAC contractor the basic equipment you sell is pretty much the same as other contractors in your industry, or town.  If you simply offer basic equipment, based on price, that item just became a commodity. So, guess what?  The customer’s decision on who to purchase from is now based on price, period!

Now enters principle number two: “If nothing is the same, price is never the deciding factor.” Think about it. How do you compare two items that are totally different in color, function, and/or benefits?  Bottom line, you can’t, so the buying process has now shifted from being a commodity decision to deciding if the offering meets your expectations. The offering can become unique in lots of different ways.  Let me quickly list just a few:

Description of Installation Process – Keep in mind most customers know little about how you will physically replace their equipment. One quote might say “Replace old XYZ with brand new ABC.” That is simple, and to the point, but very commodity based.

What would your reaction be if you read, or the salesperson explained, the process like this:

  • Our truck may be parked in your driveway, or in front of the house, your preference
  • Before entering your home our technicians will place booties on their shoes (so we don’t mess up your carpets.)
  • “Clean” drop cloths will be placed from the front door to the point of installation
  • ABC equipment will be professionally installed by one of our factory trained and certified technicians. All techs are required to have at least X number of technical training hours per year.
  • After installation the equipment will be thoroughly tested to ensure its proper installation prior to leaving.
  • The homeowner will be totally briefed on how the equipment is operated with written instructions provided, if necessary.
  • The old equipment will be properly, and environmentally, disposed of at no cost to you.
  • Office Records:
    • All your equipment information (date installed, make, model, serial number, etc.) will be entered into our state of the art computer system.
    • When maintenance is performed, or future repairs are made, all records will be maintained as part of your complete equipment history.
    • You will be notified the month BEFORE your warranty expires to allow us time to make any repairs (if needed) while your equipment is still covered.
  • Happy Call – A few days after the installation has been completed you will receive a phone call from our Customer Service Representative to be sure everything is running properly.
  • Our technicians take full responsibility for each installation they perform. Should there be a problem, necessary tweaks, or adjustments needed to the equipment the same technician that installed your equipment will return to your home.
  • One last item. We are fully insured so in the unlikely event of an accident our employees, and their work, are fully covered.

Ok, which quote was unique, and which one seemed professional to you.  Same equipment, but one is being offered based on price, the other provides extra value for the same equipment…and likely at a higher price with increased profit!

  • Offering a Variety of Add-On Options – It’s amazing how many customers would have purchased one, or more, add-on items if someone had taken the time to explain their benefits. Better yet, include some of these add-on items in the original “Best” price.
  • Extending Warranty on Labor – Consider extending the warranty on YOUR labor, free of charge. Iif there were a problem with the equipment that your technician caused you would go fix it, free of charge, right? So, why not extend the labor warranty.

Now for one last point. A commodity sale basically says, “This is the price, do you want it or not?” However, if your offering is unique you need to offer choices. Offer Best, Better, and Good in that order. Always start with the gold offering that covers everything. Then take away a few benefits on the Better offering and finally offer the Good option, in case price is a major problem. Most find the average customer chooses the Better option, but not all the time. Providing one option creates the “take it or leave it” environment. Multiple offerings provide choice.

Tom Grandy

Posted In: Management, Money

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