When someone says
Your quote was more expensive.
This is prompted the other day by a Facebook post in a Carpenter's Talk Group
by someone who'd lost out on a job to someone cheaper so he'd already lost.
And he was concerned. He thought he priced his job fairly
and he wondered how another builder, I think it was a small extension
works for any trade. He wondered how the other builder had been
much cheaper than his price and he was checking his price
in the group and his question really was I'm being reasonable with the way I've priced it.
Now when this happens,
the customer says someone else was cheaper and we've gone with them not you,
a whole heap
of possible scenarios existed. I want to explore them now
because I think it's interesting and I think it will help you if you find yourself in this position like this guy did.
The first possible scenario - some of the seven reasons why they might be saying that to you.
The first one is they lie.
This is my favorite one of course. They could well be not telling you the truth.
If they've chosen to go with someone else, it's almost never because they were cheaper than you.
That's kind of a face saver that people say instead of the truth.
Can you imagine someone saying,
We went with someone else because my wife thinks your eyes are too close together.
Or some other reason why they didn't like you.
Or we were just price checking the builder we prefer.
Their price is actually slightly higher than yours but it's close enough
and we like him better. We might try to make him match your price. Thanks for all your hard work.
They're not going to say that either, are they? Or how about this?
We had a big row and now we're getting divorced and I'm not going billed,
probably not going to say that either. It's embarrassing.
Well how about this. This is from somebody who's working for a business. A builder in a bigger business.
I have to get three quotes, it's my job
but I prefer to use this company. They take me to the strippers. I get three quotes,
I make sure my preferred builder or subcontractor or whatever is within query and then I award him the job.
That's a possibility too. No one says that to you, do they?
You think you get the idea. The easy lie or the face-saver lie
of you missed out because you're too expensive is likely not really the truth.
You might easily not be out on price. You just didn't win for other reasons.
I'll talk about not winning for other reasons separately in another video.
I'm also talking about a situation here where you didn't win. You could get the same comment,
You're too expensive where they're hoping you'll reduce your price
to match or get near
the real or not real
lower price that they're talking about.
The same possibilities these same scenarios are potentially true.
They've got different intentions but they're the same
possibilities and I've talked about that one before but we've discussed the possibility
that it's not true and 'You're really more expensive' it's a lie
They might also not be lying, it might be true and I've got six
other scenarios
to describe to you.
It is true, you've cocked it up.
There's something about the job or your trade that you don't know or that you've misunderstood or your rates
are higher than everybody else's and so somehow you've got this far without knowing.
Somewhere along the way you've charged more than you should have
or more than another competent, decent trades person or trades business
but this is the one you're mostly afraid of. This is the one
that scares you that you're wrong, possibility that you're wrong
even that you're consistently wrong and you're missing out on work because of it.
I'll make another video about this another time about how to know if your price
is kind of on point, is right. So that's a possibility that you've cocked it up, you've overpriced.
Another possibility is that the other business is cocked up and they've underpriced.
They've missed something out or forgotten something or cocks up their maths.
That's a possibility too, isn't it?
They don't really understand how to price.
They've come in low and maybe they'll be unprofitable or not very profitable.
They're a one-man show with no overheads and they are pricing just to make a living,
that kind of thing. There's a bit different than making a mistake. They just could be
achieved business that's different to yours.
Maybe your competition really wants this Job and is discounting to win
for some reason of their own that you don't know about, to get in the door for future work perhaps,
to boot you out so that they can keep all the future work. Maybe raise the price later.
Maybe they're quiet and they've got people on stuff who need paying anyway and they'd rather take
a low-profit job that pays people's wages than have them sitting there doing nothing.
Maybe they play a dirty game and come in with low quotes
but exclude parts of the job so the final cost ends up being much higher than the quote.
Well, they didn't do that so much but they gauge on the variations
and they hope to make up their margin on the variations and that's a very old game.
It's a dirty game but it's an old game. People do play it
and customers are the ones who pay the price.
Maybe they employ cheap foreign labor. Maybe some plumbing backpackers. I was one of those.
They cut corners and compromise quality or safety.
Or they buy cheap materials or they have stolen materials. They weren't properly ensured.
Or there won't be around to fix any issues down the track.
All of these are possible scenarios.
All of these are possible reasons that your quote is higher than someone else's.
There are probably others if I've missed something obvious or funny, feel free to drop it in your comments.
Now when this happens to you whether it's when they're telling you you didn't get the job
or whether they're using the same comment to try and encourage you
to drop your price and win the job is very difficult
for you to know what's really going on. It's very difficult to know whether they're lying or telling the truth
and it's very difficult if they're telling the truth to know which of those scenarios it is and that's how to respond.
So, it's very difficult for your customer
to know which of these scenarios is true. Obviously, they know if they're lying but the other sticks they don't know
so let's assume for our common discussion at the moment that they're not lying,
they don't know which of the other six possibilities are true, do they?
And this of course is your opportunity as salespeople for your company. If they've already awarded the contract
to someone else, you're too late for this one.
Cut your losses, move on. But if they've not yet awarded the business you have an opportunity to explain
some of this stuff to them and help them out and position your business. There's the good guys, the ones
who aren't going to do these terrible things
but you're already on the back foot. You're coming from a position where you're already more expensive,
you trusted and your helpfulness is already damaged.
So what we should do of course is prepare yourself on your sales process before you find yourself in this
situation which of course means now
so this doesn't happen to you next time. Explain these scenarios and how they're possible
and explain how in your case they aren't true, they aren't happening.
Explain how you calculate your price,
your rates, your process for calculating from your rates to the cost of the quote.
Show them clearly what's included and not and show them how to check other quotes
about what's included and what's excluded. Do this early in your meetings in your sales process.
Try to do this early in your sales process, do in your meetings when you talk to people before
you do your quote and document it in your quote when you present your quote and explain it to them
as you deliver your proposal. And I mean proposal, not just a quote.
If you're early in your sales process hopefully they're not lying to you yet.
You are pre-empting - your quotes more expensive and the kind of implied comment for the same stuff.
Let's talk about your price.
Explaining your rates and how you work out means they can compare your quote,
your price or final price to another one and see what's different. They can look for a mistake
and they can find one it might be you, might be your competitor.
Or they can look for the difference and so 'Look you've included this' and they haven't and you can have a
discussion. Saying goes if it's your competitor's mistake.
Understanding and comparing rates and inclusions and exclusions and the process for calculating the final price
helps your customer get clarity.
And of course avoid a situation where they're working with is a supplier or a trade who's made a mistake.
The third scenario where your competitor is cheaper -
there'll be a disadvantage in hiring a cheaper business. There will be disability or risk.
A one-man show where a very small show is much more likely
to suffer interruptions to a job. Maybe someone's sick or whatever then sit on a business with five or ten people.
So you can point out the risks
of the cheaper quote if you've got some knowledge, if everyone understands.
If your competitor really want the job, this sounds like a win for the customer it might be
but how confident are they that this is the case? You're going to help
your customer trying to figure that out. The dirty game of course is very unnerving for the customer.
They don't want this delay. They don't want to get a quote
for X amount and find it's significantly more by the time they get to the end of their project.
That must be terrifying. See looking at those exclusions particularly.
And the corner-cutting people, the ones who are going to quote cheap and do it cheap.
The customer is going to get a much worse outcome than they want.
Show them how to check references perhaps, past jobs licenses, insurances that could current job sites -
things like that.
I've written this knowing that the customers you're explaining this to in the earlier part of your sales process
before you get caught in the your quotes too expensive situation
I write all this knowing that they might not care.
They might feel that they can manage the situations. They might feel that the cheaper price is worth the risk
that they can manage that risk or manage that supplier or that trades person or trades business
and to someone apparently will genuinely cheaper than you. They might do that.
But what you doing when you explain this is you're building the relationship and you're building some trust
and you're maximising the chance that your customers see your price
in context that they understand what they're getting for their money with your business
and they understand that other quotes might not be giving them the same
for the money and they can go and check and they may can make an informed choice.
You're doing a good thing for your business. You're maximising the chances that they'll work with you.
You're building that relationship and you did a good thing for your customer which never hurts.
And it's not even difficult -
this process. I know it sounds like a lot of work. There's a bit of work.
This video took me a couple of hours to write yesterday and today if you're my client,
you might spend a few hours watching the video training and talking to me, writing your sales process
and what you say at each stage of it
and writing your proposal template.
But once you've done all that, you can reuse it over and over again for every sale that you make.
You'll win more jobs and you'll probably win at the higher margins as well but you won't be competing so hard
on price. If you think that improving your sales process is worth some effort, maybe I can help.
You can book a 10-minute chat with me.
You can come to a Tools Down Workshop.
Follow your nose and you'll find the way.
See you.