Home improvement contractors don't like to be maneuvered into “low-bid-takes-it” situations. But in a world of big box retailers selling mostly on price, and contractors advertising that they'll give estimates over the phone, encountering consumers with a lowest price fixation is inevitable.
Most if not all replacement contractors build room for negotiation into the price and offer a combination of incentives and penalties to encourage salespeople to hang onto profit dollars. Successful replacement contractors also try to avoid head-to-head bid comparisons by the way they position themselves in the market and how they structure the sales presentation.
“We show our quality, we show our reputation, and if it's done the correct way, the other bids go away,” says Rodney Webb, vice president, sales, at Dixie HomeCrafters. Price is negotiable, to a point. One example would be a customer who offers scheduling flexibility — “to trade them time for dollars and get started now,” Webb says. But, he adds, “we're not in a price contest. We'll tell the homeowner when we first get there, ‘If you want the cheapest price, we're not the guys for you.'”
Tri-State Remodeling, Branford, Conn., takes a similar tack. “When we are done showing them what we have to offer, they don't want anything else,” says company president Brad Pompilli. “Our products are designed to replace other products, not compete with them.” Pompilli says he's positioned the company by selecting what he considers a premium product in all the lines he carries. “Sometimes you have to be a little flexible in your price, but our target customer understands that you get what you pay for,” he says.
Differentiation is also the key at Dial One Window Replacement Specialists, Santa Ana, Calif. “If we're doing our job of selling right, we are constantly trying to differentiate, not just in the products but in the service, the warranty, and the company that's going to do the job,' says Charles Gindele, president. Dial One salespeople are focused on “the four Ps”: the customer's problem, the product that will solve it, the people who'll do the job, and the right price for the job.
“We try to eliminate an apples-to-apples comparison and create an apples-to-oranges comparison,” Gindele says. “In the absence of a difference, the only difference is going to be price.”