I was on the phone with a subcontractor last week. One of the products we were looking at wasn’t going to fit in with the investment range we had pre-determined with the clients, and I needed another, less expensive selection.
In the most defeated tone I’ve ever heard, he said, “I can drop the price, but it’s tight out there—I have almost no room to move, but if that’s what we need to do to close the project, then I’ll drop it XXX dollars.”
He wasn’t listening.
I wasn’t asking, “Can you reduce your profit?”
I was asking, “What other options—materials, styles, details—do we have available which might lower the price?”
Here’s what I’ve learned from my first three recessions (this is my fourth):
First, put yourself in the consumer’s shoes. They’re concerned about their choices, and they want to get the best value for their hard-earned dollars they can. Not all of them are waiting for you to say, “Oh, wait. You’re right. I’m clearly overpriced, so let me just drop my price now,” which is what they think when you don’t value your own set prices. (Okay, they think that, and “bonus!” And you walk away depressed because you’re not getting what you need.)
You’re selling yourself short here. When they say, “I can’t afford that, can you drop the price?” here’s what I hear: “What is the value of this item I’m buying? What are my options for the money I have to spend?”
Now, they may also be saying, “But that’s what I want. I just want you to be less expensive!” but they’re all really versions of the same thing.
The onus is on us to be the experts, to overcome objections and to build value into the work we do—not become dispirited because we think they’re not going to spend the money. Ask yourself what the value is that you’re providing. If you can’t answer, then you may end up like my friend above.
People are looking for deals, yes, but you have a business to run. You want to be around for them in the future. Lower your overhead, or find less-expensive options that will give your client the look they want. Or at least explain the differences so they can make an informed choice.
The ending to the story was that I told the sub-contractor that he did not need to lower his profit. We found another product that was less expensive and actually worked better for the scale. The client’s happy, the sub-contractor’s happy, and I received a good reminder to pass along.
Until next time~
This entry was posted on Wednesday, March 31st, 2010 at 6:00 AM and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.