Best way?

[ItsHot]

What is the best way that you handle customers that after receiving your price quote,then start trying to talk that price "down"? I guess that is called "negotiating"? Thanks for your thoughts!

[220/221]

If there is a part that they can do (trenching maybe?) I will offer a small reduction.

Otherwise I tell them our pricing is fixed, it's the best we can do, walk away and hope they don't call.

HUGE red flag.

[celtic]

I used to build a 10% extra into my bids for "negotiating factor".
It didn't help.
If you offer 10, they want 15....either way, you just confirmed their idea that we are making money hand over fist.

So now I start with ...the cost of copper has risen 300% in the past 2 years; fuel cost are through the roof, insurance is insane...and lead up to ...so where we shall we try and trim this job to a price that matches your budget....we can delete this that and the other thing...

Or in other words...just be honest with them.

[mdshunk]

When a customer wants to talk you down, you first need to know that you didn't do your job. You didn't build enough value in whatever pitch you did (or didn't) give. The goal is to build enough value for them to think the price is cheap.

There are many closing techniques to use when the objection is that "the price is too high". That objection, on the face, is something really only rookie salesmen get. One approach to diffusing that objection, which will allow you to drop back and build more value is called "the drive-in theater close":

"I understand how you feel. Others have felt the same way, but when they considered __________, this is what they found".

You'll note the emphasis on feel, felt, and found, which is fundamental to how this closing technique works. Use that blank space to give your pitch some more, perhaps much more if you never gave it in the first place, and ask for the sale again. Tell them why your price represents value.

If this doesn't work, you can start offering to subtract things off the scope of work to bring the price down to match their budget better.

Since there are literally hundreds of ways to handle the price objection, I would highly suggest some Zig Ziglar and Brian Tracy books. By reading these books, you'll learn how to use "test closes" throughout the pitch to almost guarantee that any objection when you ask for the sale will not happen. These books are also quite useful to the electrician in the field who's additional income may be partially tied to upselling.

[LarryFine]

Try this:

You: "This complete job (blah, blah, blah) will be $3,475."

Customer: "That's too much, more than I expected, etc. How about $3,000?"

You: "After looking over the numbers again, I can offer it to you for $3,750."

[satcom]

If there is a part that they can do (trenching maybe?) I will offer a small reduction.

HUGE red flag.

We stopped that years ago, when we got the homeowner dug trench, it was never stright, or deep eniough, so it ended up costing us time to clean up their mess, and time is money.

[Pierre C Belarge]

People are conditioned to ask for something off of the job price.


I would have either of 2 responses.

Customer $ 1
"Pierre, I have given you a number of jobs, do I get a volume discount?"

Pierre's Response
"I wonder how many gallons of milk you have purchased from your grocer? Have you asked them for a volume discount...and they are a billion dollar corporation"


Customer # 2
"So Pierre, what do you think you can do with the estimate price?"

Pierre's Response
"Well, I thought I gave you a good price, but I can go up about $500 if you like." Stops them in their tracks.

I never negociated down in the last 6 years I was in business. There is not enough time and once you go down in price, two things happen.
1. they think you over priced the job.
2. They will keep on asking for money off in the future...a bad way to do business in my mind.

Yes, I did bid on some work, but not a large percentage of my work.


Okay, so I only had 2 customers... the ones above. :grin:

[ItsHot]

Thank you for the great info. Larry I am really going to have to remember your technique!! The job that made me consider posting this question, has something similiar to all of your thoughts. Even the trenching part.By the way I did get the job, I nudged a little becuause there will be a follow up "bigger" job that i hope to get also. Thanks again!

[mdshunk]

People are conditioned to ask for something off of the job price.
I disagree wholeheartedly. You did something that caused them to feel that they could try. There aren't many people in line at WalMart trying to negotiate the price of their goods with the cashier. There aren't many people in line at Jiffy Lube trying to negotiate the price of their oil change.

[ItsHot]

The part that I "nudged " down on is 4 can lights that the customer decided he could do with out.

[mdshunk]

The part that I "nudged " down on is 4 can lights that the customer decided he could do with out.
That's a good way to handle that. You didn't cut your price then, in that case, and if you were savvy, you might have even left your profit in the price for thost cans anyhow.

[satcom]

The part that I "nudged " down on is 4 can lights that the customer decided he could do with out.

We noticed, once you come down with your price, they are convinced you were too high in the beginning, and they are problem customers after that.

[LarryFine]

I nudged a little becuause there will be a follow up "bigger" job that i hope to get also.
That's how it often happens. When someone holds the next job in front of me, looking for a discount, I tell them I'll give them a discount on that next job when it happens. It almost never does.

[growler]

If this doesn't work, you can start offering to subtract things off the scope of work to bring the price down to match their budget better.


That's it right there. You don't negotiate the price just the scope of work.

If you are in the check out line at Wal Mart they won't reduce the price if you don't have enough money but they will let you put items back on the self to be purchased at a latter date.

I think many people just like to test your responce. Why shouldn't they ask for a price reduction, you could be dumb enough ( you don't look to smart and you do work for a living).:grin: :grin:

[electricguy61]

Sometimes, negotiating is a cultural thing. In certain Asian cultures, you wouldn't get a job w/o a little give and take.

I try to read the customer as I'm looking over the job. If I feel the need, I can always find some room for negotiation.

Sometimes though, people are just cheap. I don't work cheap and don't bid cheap. Again, if I think that's the type of customer I'm dealing with, I'll bid the work fast and high, and get on to more productive activities.

[charlie b]

This often happens in the engineering world as well. The responses I have seen made by the companies I worked for, when a client asks for a lower price, was essentially the same in all cases. We went through the work scope, and told them that if we dropped this item from the project, we could reduce our price by that much.

[satcom]

Before your too fast to reduce your price, think about your own situation, will your suppliers reduce their prices, try to get a reduced rate from your phone company, or your insurance rates, how about your truck payments, fuel prices, and all it's repair charges, you will most likely kind , they will not reduce prices, but rather incease then, on a regular basis, if your selling street goods in a third world country, where there are no orderly markets, yes then you can bargin, the prices.

[pbeasley]

Before your too fast to reduce your price, think about your own situation, will your suppliers reduce their prices, try to get a reduced rate from your phone company, or your insurance rates, how about your truck payments, fuel prices, and all it's repair charges, you will most likely kind , they will not reduce prices, but rather incease then, on a regular basis, if your selling street goods in a third world country, where there are no orderly markets, yes then you can bargin, the prices.

Will my suppliers reduce prices? Yes, especially on larger orders, repeated similar orders, and things they accidentally over-ordered to begin with. I also expect (and sometimes ask for) zero reduction for the small jobs, or things that I know are going to come with a lot of research on their part.

I negotiate with my insurance broker, my banker, both my phone companies, and the auto repair-shops. Sometimes I get a discount, sometimes I don't. If I take my car to the dealer for an oil change, I'm gonna pay retail. If I need oil change, tune up, transmission flush, gaskets, and a new alternator, I'm going to ask for, and usually get, a discount on the labor. That's because the dealer and I both know they have fixed pricing for those items based on a nation-wide average of the hours it takes to do each job. When they have the same tech, working in the same area of the truck, it takes a lot less time then it is priced at.

If I think a price is unreasonable for the market/labor/parts/quality combined, then I have no problem saying so and asking for a contractor to verify the numbers. Then I make a decision from there.

As an example, many contractors around here like to flat rate recessed down lights. I on the other hand would expect the reasonable cost of 6 cans installed in 1 upstairs room (with attic space), 1 switch, & 1 home run to be different than 2 cans each w/ 1 switch installed in 3 downstairs rooms (no crawl space), & 1 home run. If they come back as the same price on 2 line items of the same estimate, I'm going to ask them to recheck the numbers, even if I think they have underbid. I want to keep the contractor in business, I am not interested in keeping them in Armani. Is that unreasonable of me as a client?

[satcom]

Will my suppliers reduce prices? Yes, especially on larger orders, repeated similar orders, and things they accidentally over-ordered to begin with. I also expect (and sometimes ask for) zero reduction for the small jobs, or things that I know are going to come with a lot of research on their part.

I negotiate with my insurance broker, my banker, both my phone companies, and the auto repair-shops. Sometimes I get a discount, sometimes I don't. If I take my car to the dealer for an oil change, I'm gonna pay retail. If I need oil change, tune up, transmission flush, gaskets, and a new alternator, I'm going to ask for, and usually get, a discount on the labor. That's because the dealer and I both know they have fixed pricing for those items based on a nation-wide average of the hours it takes to do each job. When they have the same tech, working in the same area of the truck, it takes a lot less time then it is priced at.

If I think a price is unreasonable for the market/labor/parts/quality combined, then I have no problem saying so and asking for a contractor to verify the numbers. Then I make a decision from there.

As an example, many contractors around here like to flat rate recessed down lights. I on the other hand would expect the reasonable cost of 6 cans installed in 1 upstairs room (with attic space), 1 switch, & 1 home run to be different than 2 cans each w/ 1 switch installed in 3 downstairs rooms (no crawl space), & 1 home run. If they come back as the same price on 2 line items of the same estimate, I'm going to ask them to recheck the numbers, even if I think they have underbid. I want to keep the contractor in business, I am not interested in keeping them in Armani. Is that unreasonable of me as a client?

I think your missing the point, of cost of doing business, with the direct cost, sure you can go to another phone company for your service, but the unit rates will remain the same with that company, and the same goes with your vendors, you can change a vendor, but every price he quotes you will pass on to your customer.

You have a phone company now, what are you going to do move to another company every time you deal with a customer?

Or change your yellow page Ad. after it is published and get a better Ad rate?

The State makes the laws that controll the Worker comp insurance rates, you can run to a hundred brokers, but the rate will remain the same.

[Rewire]

I am always looking for the bargan I shop at wal mart the day after a holiday and buy at 70% off. I rented a car and asked for a free upgrade and got it.I bought the fridge for our shop at the box store and had to get a manager to do it but they lowered the price because it was the floor model.My money spends everywere and if someone does not want to negotiate that is fine I can go elsewere that is the way I aproach a customer who wants to dicker the price if I have room I might penny price them if not they are free to go elsewere.

[aline]

Here's a few articles some of you may be interested in. Click on the link below and scroll down to "Articles that have appeared in Contracting Business magazine"

http://www.hvacprofitboosters.com/Tips/tips.html

[cowboyjwc]

Try this:

You: "This complete job (blah, blah, blah) will be $3,475."

Customer: "That's too much, more than I expected, etc. How about $3,000?"

You: "After looking over the numbers again, I can offer it to you for $3,750."

I used that teqnique once when I was having a garage sale. I was selling something for $50 that was a steal at that price:

Lady: I'll give you $35
Me: Sorry it's $50
Lady: $40
Me: $50
Lady: $42
Me: $60
Lady: Wait you went up.
Me: Yep and now I think we're probably going to be able to work something out because I'd be willing to come down to say...$50.

[Rewire]

I used that teqnique once when I was having a garage sale. I was selling something for $50 that was a steal at that price:

Lady: I'll give you $35
Me: Sorry it's $50
Lady: $40
Me: $50
Lady: $42
Me: $60
Lady: Wait you went up.
Me: Yep and now I think we're probably going to be able to work something out because I'd be willing to come down to say...$50.
The question is how much unsold junk did you have to pack back into the garage at the end of the day haggeling makes garage sales fun.

[satcom]

The question is how much unsold junk did you have to pack back into the garage at the end of the day haggeling makes garage sales fun.

And some guys like to run their business like a garage sale, the garage sale is the one time you can operate like a third world country, street market, and get in practice for out future markets!

[HyVOLtage]

I disagree whole-heartedly with most of what I have read here. Noegotiation is a part of business, and it always will be. Why not ask for a discount? What's the worst that can happen....they say "No"? That wouldn't scare me. There is a huge difference you all are missing. At Wal-Mart the cashier that rings you up has no authority, it's not her money that is involved on the transaction. Where as with the electrical job, this guy has control over the price, and it's hismoney that is involved. He has the power to say "Yes" or "No". You can't fault someone for asking.

[celtic]

There is a huge difference you all are missing. At Wal-Mart the cashier that rings you up has no authority, it's not her money that is involved on the transaction.

Nobody missed it...it was simply ignored.
The Wal-Mart example is one of a retailer having a sale...apples to oranges for this thread.

[HyVOLtage]

I agree, that's why I brought it up. I'm not the one that started with that example.

[Rewire]

I would like to make a million dollars on a single job but so far that has not happened doesn't mean it could never happen just means it hasn't happened yet in the mean time I still have bills to pay so if I have to adjust a little for the market as it presents itself at that moment which is what negotiation is I will . I like Sams idea ,make a dollar on each one but sell a million.Getting the job does not always mean profit but not getting the job always means no profit.If someone put a dollar on the table and told you to pick it up would cost you a quarter would you walk away?

[aline]

If someone put a dollar on the table and told you to pick it up would cost you a quarter would you walk away?
Electrical contractors would bid on picking up that dollar until someone was willing to pay $2 to pick it up and he would get the dollar. :)

Some really want that dollar bad and will pay anything to get it.
After all they may find $5 in change under the table after they get that dollar. :)

[Rewire]

Electrical contractors would bid on picking up that dollar until someone was willing to pay $2 to pick it up and he would get the dollar. :)

Some really want that dollar bad and will pay anything to get it.
After all they may find $5 in change under the table after they get that dollar. :)
and most of them live here, OOB electric

[cowboyjwc]

The question is how much unsold junk did you have to pack back into the garage at the end of the day haggeling makes garage sales fun.

Nothing, it was one of those "you buy or goodbye" sales.:grin:

I gave away a whole bag of stuffed animals that didn't get sold to a childrens crisis center. My point was, the item might have been a $100 item, I had already done all the haggaling I was going to by marking it down to $50.

When guys really want the work they will sharpen their pencils and give the best price they can. Haggaling is over.

Many of you on here say that you need to make $90 p/hr to run your business. If that's what you need to make, then that's what you need to make and why start fudging? If they want it for $70 p/hr then have them call the guy that can do it for $70 p/hr, but settle that before hand not after they get handed the bill.

I once relayed on this forum how many breakers I had reset for free and guys jumped all over me that the was a justified $100+ billable call. So my point is if you are going to charge $100+ for a two minute call why would you give a break on an all day job?

[220/221]

I want to keep the contractor in business, I am not interested in keeping them in Armani.


Yeah.....Most of my contractor buddys wear Armani exclusively.

[ElectroMagnetism]

The problem is the public has been taught to treat the trades as a commodity.

We do not sell a complete finished piece of equipment you can unload, plug in and turn on like with a new freezer.

They think they are just traveling from Best Buy to Circuit City to Home Depot with a circular in their hands when shopping with us to see who has the lowest price. They need to realize they are purchasing our knowledge and talent we will utilize to “engineer” “build” “install” “fabricate” and any other disciplines required to produce what we provide.

What the public is looking for is no different than when they shop for a Doctor who will treat them when they are conducting business with us. When was the last time you negotiated with your doctor over his charges, or did you just pay the bill knowing you have received “value” for your money and the best you could find for your money even though insurance pays for it.

This needs to be explained to customers for them to realize what we actually bring to the table and get them out of the commodity mindset because not all contractors are alike and not all will give them the same finished product.

It takes knowledge, talent and skill to install that toilet correctly, the A/C correctly or a new service panel correctly, and that is what they are buying, not a new house already built they can just walk into and sit down.

Sell the "value" and you can get whatever price you ask for. Don't sell the value, and you are just competing on price alone.

[pbeasley]

I think your missing the point, of cost of doing business, with the direct cost, sure you can go to another phone company for your service, but the unit rates will remain the same with that company, and the same goes with your vendors, you can change a vendor, but every price he quotes you will pass on to your customer.

You have a phone company now, what are you going to do move to another company every time you deal with a customer?

Or change your yellow page Ad. after it is published and get a better Ad rate?

The State makes the laws that controll the Worker comp insurance rates, you can run to a hundred brokers, but the rate will remain the same.

Actually, no. I don't usually jump from one company/contractor to another over just price, for many of the reasons that have been listed in this thread.

The only time I changed phone companies was when I have moved and the current phone company didn't offer service where I was moving to. Workers comp rates are set, but liability and coverage on your truck/vans are not.

One thing is certain, if you never ask for a discount, it is less likely you will get one. Similarly, not all people who ask for a discount expect to receive it. I don't think less of a vendor/contractor who sticks by their prices. I don't think less of a client who asks for it to be less. Both are a part of doing business.

[mdshunk]

I disagree whole-heartedly with most of what I have read here. Negotiation is a part of business, ....
Then you're essentially agreeing, then. Yes, negotiation is part of business. It is therefore incumbent on the person selling the services to realize this and have the closing skills to not budge on price.

[Rewire]

Then you're essentially agreeing, then. Yes, negotiation is part of business. It is therefore incumbent on the person selling the services to realize this and have the closing skills to not budge on price.
Being rigid in business is a mistake you have to remain flexible.Getting my price is always the goal but I have found you never start at the goal.I seldom have the need to negotiate my price but when the need arises I am not going in with the "I won't budge" attitude or I will never get my price and if giving a little gets me the work then I see that as good for me as a little profit trumps no profit any day of the week.

[nakulak]

I try to read the customer as I'm looking over the job. If I feel the need, I can always find some room for negotiation.



my thoughts exactly.

if it is a small job, we never negotiate (unless there is a bunch of other work associated with it).

if its a one-shot deal, forget it.

if its a sizable job, we will always take a second look at our bid - provided that the client is worth it. There are a lot of mitigating circumstances, and lots of reasons to tell them to take a hike, and lots of reasons (future work, past work, networking leads, etc.) to negotiate. I don't think one answer fits all circumstances.

(i agree with whoever said zig ziegler rules)

[jjhoward]

Marc, I like your approach. When running your own business, you must wear many hats. That sales hat is vitally important!
Always be prepared when "selling" the job.
I know there are times when I am simply relieved that I finally completed a quote and sent it out to a customer.
Getting the quote completed is one thing, but "selling it" is crucial. Let the customer know what value you are bringing to this job that your competition isn't.
I have had many customer say, gee we really like you but...Ugly Harry can do it for this price....
I will offer portions of the job to be removed or scaled back somehow to reduce the price.

[Buck Parrish]

Yes , then when you agree to do the job for less and you forget and leave something out or make a mistake.
One of my customers said well what about such and such.
I said well since you wanted a cheaper price I had to figure how to cut cost. So you got a cheaper job, too. He was'nt real happy about that. But I got some gratification for saying that.

[jjhoward]

Yes, cheaper job is possible, take this and this and this out...
OK, here is your Rev2 quote and updated contract, sign the dotted line!:)

[iaov]

Negotiating is certainly a part of doing buisiness, but when I submit a bid I don't back down from it. The customer can accept it or go some place else. More times than I care to admit I have left "money on the table" from under bidding a job. An old contractor told me a while back that you don't have to get every job you bid on. If you are doing things right you'll make just as much money and work less hours if you are not getting every contract you bid on. He was right.:smile:

[480sparky]

Negotiating is certainly a part of doing buisiness, but when I submit a bid I don't back down from it. The customer can accept it or go some place else. More times than I care to admit I have left "money on the table" from under bidding a job. An old contractor told me a while back that you don't have to get every job you bid on. If you are doing things right you'll make just as much money and work less hours if you are not getting every contract you bid on. He was right.:smile:

Agreed. If you get every job you bid on, you're way too low on your prices. You'll end up driving your '84 Mazda pick-up down to Sams Club or Costco to buy ramen noodles by the case.