Becoming a better salesman

[Kdog76]

I am looking for some good resources to learn to become a better salesman. My main problem is when a customer has a ton of stuff to do, doesn't know how much he or she wants done, and still wants a price. The job I was on today I thought I did it right by going thru it all & writing down what needed to be done based on the needs of the homeowner (this is electrical resi stuff that needs to be done prior to a home sale) Some of it has to be done (i.e. kitchen & closet lights not working, some mickey mouse stuff needing to be redone ) & some of it doesn't (i.e. cover plates/ bulbs/ etc. that mr. son-in-law could do). I could have priced it out a million ways.

When I completed my list I had a ballpark idea for labor...(i.e. a few days of labor if she had me do it all) I know what I should be charging because I have read through the Ellen Rohr book. (Still reading thru that one actually). Problem comes when they ask "well how much"...I like the idea of a flat fee so there are no misunderstandings and they know what the bill will be...I can't give a flat fee or even a ballpark # unless I know what needs to be done. I felt that how much she would have me do may be based on how much it costs. I was going to give her a price breakdown, but her son-in-law suggested that we settle on a set fee per day doing the priority stuff first and take it a day at a time. The son-in-law is one of the best carpenter contractors in my county & know him real well. I knew I'd have the job but wanted to do the pricing right.

I started throwing some numbers out there and then she balked a little. Then I told her that it depends on what you have me do. Then I said "you know forget I gave you any numbers, let me itemize and price out everything on my list" That may be crazy because I've got about 30-40 things to do on this list. Naturally they want on-the spot numbers. I felt flustered and kinda lost it a bit being put on the spot like that & walked away upset & knowing I need to learn a little better skill set. I did get the job but think I could have handled it more professional. I could still suggest T&M for this job because nothing is signed yet.

Everyone's got their opinions as to whether a job may be T&M or flat fee. For those of you who have read Ellen's book how would you handle this one? Just venting a little here because I know I could have done a better job when I was put on the spot like that. And I already know some of you are die hard T&M guys, some are flat fee guys.

Any thoughts?

 

[Benton]

I am looking for some good resources to learn to become a better salesman. My main problem is when a customer has a ton of stuff to do, doesn't know how much he or she wants done, and still wants a price. The job I was on today I thought I did it right by going thru it all & writing down what needed to be done based on the needs of the homeowner (this is electrical resi stuff that needs to be done prior to a home sale) Some of it has to be done (i.e. kitchen & closet lights not working, some mickey mouse stuff needing to be redone ) & some of it doesn't (i.e. cover plates/ bulbs/ etc. that mr. son-in-law could do). I could have priced it out a million ways.

When I completed my list I had a ballpark idea for labor...(i.e. a few days of labor if she had me do it all) I know what I should be charging because I have read through the Ellen Rohr book. (Still reading thru that one actually). Problem comes when they ask "well how much"...I like the idea of a flat fee so there are no misunderstandings and they know what the bill will be...I can't give a flat fee or even a ballpark # unless I know what needs to be done. I felt that how much she would have me do may be based on how much it costs. I was going to give her a price breakdown, but her son-in-law suggested that we settle on a set fee per day doing the priority stuff first and take it a day at a time. The son-in-law is one of the best carpenter contractors in my county & know him real well. I knew I'd have the job but wanted to do the pricing right.

I started throwing some numbers out there and then she balked a little. Then I told her that it depends on what you have me do. Then I said "you know forget I gave you any numbers, let me itemize and price out everything on my list" That may be crazy because I've got about 30-40 things to do on this list. Naturally they want on-the spot numbers. I felt flustered and kinda lost it a bit being put on the spot like that & walked away upset & knowing I need to learn a little better skill set. I did get the job but think I could have handled it more professional. I could still suggest T&M for this job because nothing is signed yet.

Everyone's got their opinions as to whether a job may be T&M or flat fee. For those of you who have read Ellen's book how would you handle this one? Just venting a little here because I know I could have done a better job when I was put on the spot like that. And I already know some of you are die hard T&M guys, some are flat fee guys.

Any thoughts?

I've had that problem at times. I have learned to repeat to the customer what they have asked me to do, so that we both are at the same understanding. I usually only through out quick quotes on smaller jobs when I can mentally refer to a similar sized job. Otherwise, I just tell them that I will call them the next day with the quote-then you have time to refer to your book or whatever method you use.

 

[masterinbama]

I would price out the must be done items at a flat rate, then line item the others.

 

[bradleyelectric]

I did get the job but think I could have handled it more professional. I could still suggest T&M for this job because nothing is signed yet. Any thoughts?

You did get the job. Go with the pricing you gave to get the job. To flounder on the pricing after you already have the job wont make you look more professional.

The information Ellen has given you should determine your pricing. If you do not price according to what you need to make it is not helping you, your customer or your family. Understand that and you will become more comfortable with your pricing and more confident in your delivery.

 

[jmsbrush]

If you have read her book then you understand the need for flat rate pricing. With that being said, you need to get a good flat rate system. You can buy them or you can make your own, which will take a long time.

Here is a simple example of a switch. Let's say the average time to change out a switch is .25

Price of Switch $1.05
Price of Plate $.55

Let's use $200 an hour for your labor rate to determine all of your prices.

$200 X .25 = $50

$50 + $1.60 = $51.60

If a call comes in. Charge a dispatch fee: for example $75.00.

$51.60 Switch replacement
$75.00 dispatch

Total invoice $126.60

As far as sales. When you have a good system and know what it takes to keep and run a successful business, you will acquire the confidence that is needed to prices jobs correctly. There are also some good selling systems on the market that will help you succeed with sales.

You are running the business, not the carpenter. You are on the right track on learning how to price, now its time to implement it.

 

[Kdog76]

jmsbrush, I think you said it all with your signature line.

Do you market out your flat rate system? Seriously though, that kind of a flat rate system is just the next step I need to take. I don't mind creating my own set-up though. This is actually my 5th year in business and I've got a good customer base with which to work. Up till recently I had doing primarily T&M work but would like to step-up to make what I know I am really worth.
I will look into that or maybe create my own set of pricing books.
I do not currently have a dispatch fee for service calls so I can plan on figuring that in also.

 

[kiddrock]

Kdog, I couldn't agree with with you more about your statements in this thread. We go through the same type of problems with some of our customers. We've also been in business only a short time of 6 years and we may have a lot in common. I talked to James Brush last week about his flat rate software, and feel that it is right for us and the only way to go. He's a pretty smart guy. Check out his electrical flat rate system on his website. We've been flat rating all jobs for several years (excluding troubleshooting that's been t&m), but i'm sure that has still not been the right approach. From the customers point of view we have been pulling prices out of thin air (whether we are or not) with no real written structure. I think his plan will set us apart in the electrical service industry.

 

[Strife]

First of all: I NEVER give quotes on the spot.
Second: I ALWAYS walk away from customers who want a price to "FIGURE out" what's wrong. Just yesterday I had a guy who asked me to figure out what's wrong with his landscape lights and give him a price. I asked him if he changed lamps in any of the lights. The answer was no. I guess he expected me to change his lamps for free.
Last: My best sales pitch in situations like this is: "look, there's a lot of uknowns in this job, if I have to price it I will assume the worse case scenario, so why don't I give you a not to exceed price based on the worse case scenario and charge T&M". Most of the times the customer is happy because they have a price and most of the times it does take less doing T&M than assuming worse case scenario. And in the few situations I was wrong on my worse case scenario I still made the bill 1-2% cheaper than the not to exceed. or 50 bucks, whichever was higher.

I am looking for some good resources to learn to become a better salesman. My main problem is when a customer has a ton of stuff to do, doesn't know how much he or she wants done, and still wants a price. The job I was on today I thought I did it right by going thru it all & writing down what needed to be done based on the needs of the homeowner (this is electrical resi stuff that needs to be done prior to a home sale) Some of it has to be done (i.e. kitchen & closet lights not working, some mickey mouse stuff needing to be redone ) & some of it doesn't (i.e. cover plates/ bulbs/ etc. that mr. son-in-law could do). I could have priced it out a million ways.

When I completed my list I had a ballpark idea for labor...(i.e. a few days of labor if she had me do it all) I know what I should be charging because I have read through the Ellen Rohr book. (Still reading thru that one actually). Problem comes when they ask "well how much"...I like the idea of a flat fee so there are no misunderstandings and they know what the bill will be...I can't give a flat fee or even a ballpark # unless I know what needs to be done. I felt that how much she would have me do may be based on how much it costs. I was going to give her a price breakdown, but her son-in-law suggested that we settle on a set fee per day doing the priority stuff first and take it a day at a time. The son-in-law is one of the best carpenter contractors in my county & know him real well. I knew I'd have the job but wanted to do the pricing right.

I started throwing some numbers out there and then she balked a little. Then I told her that it depends on what you have me do. Then I said "you know forget I gave you any numbers, let me itemize and price out everything on my list" That may be crazy because I've got about 30-40 things to do on this list. Naturally they want on-the spot numbers. I felt flustered and kinda lost it a bit being put on the spot like that & walked away upset & knowing I need to learn a little better skill set. I did get the job but think I could have handled it more professional. I could still suggest T&M for this job because nothing is signed yet.

Everyone's got their opinions as to whether a job may be T&M or flat fee. For those of you who have read Ellen's book how would you handle this one? Just venting a little here because I know I could have done a better job when I was put on the spot like that. And I already know some of you are die hard T&M guys, some are flat fee guys.

Any thoughts?

 

[Kdog76]

While I won't say I never give a price on the spot, as a rule I typically don't. And if the job is somewhat of a moving target, I won't suggest a not-to-exceed if I am doing it T&M. Reason being this: If I bid the job I am held to that price if I make money or not. That's the risk I take for giving a firm quote.

If I am hourly then there is no risk of me not making my hourly rate (assuming we get paid promptly, etc.) unless I give a not-to-exceed # and the job goes over (which can easily happen). So there is a risk if you go over that limit, but no profit beyond your charge out rate. In my world I like to be compensated for taking a risk.

I worked on a T&M job (a local airplane hangar job comes to mind - complete with restaurant, bar, pilots lounge, conference rooms, jet fuel & av gas pump station, huge job 100k+ sq ft). The owner wanted a not-to-exceed price, or at the very least some idea of what it would cost. My boss at the time gave him niether because all planning was done last minute as he kept changing things around. That job started 4 years ago, and was open for business about 3 years ago. My old boss is still out there on a weekly basis, still doing it T&M because the guy keeps on adding & adding & adding stuff. If there had been a "not to exceed# " it would have killed him. Even putting any number on it would have been a mistake.

A not-to-exceed # is fine in some cases, but I won't go out of my way to suggest it. I would just as soon bid the job if it's not to much of a "moving target". And in the future I will watch my tounge before spouting out numbers.

 

[bradleyelectric]

First of all: I NEVER give quotes on the spot.
Second: I ALWAYS walk away from customers who want a price to "FIGURE out" what's wrong. Just yesterday I had a guy who asked me to figure out what's wrong with his landscape lights and give him a price. I asked him if he changed lamps in any of the lights. The answer was no. I guess he expected me to change his lamps for free.
Last: My best sales pitch in situations like this is: "look, there's a lot of uknowns in this job, if I have to price it I will assume the worse case scenario, so why don't I give you a not to exceed price based on the worse case scenario and charge T&M". Most of the times the customer is happy because they have a price and most of the times it does take less doing T&M than assuming worse case scenario. And in the few situations I was wrong on my worse case scenario I still made the bill 1-2% cheaper than the not to exceed. or 50 bucks, whichever was higher.

I with very few exceptions give a price on the spot for small residential service. When I am there I expect to do the job, not look at it, go somewhere else and figure out what to charge, then maybe go back and do the job or have the risk of someone else that goes to the job prepared to do it and I waisted my time going for a look see. I very rarely make the bill cheaper then my quoted price. I make more then some "going rate" because of my ability to adapt and think on my feet, and my ability as an electrician. I collect on being efficient, not give money away because of it.

I'm pretty good at being able to figure stuff out and making money on it. If he wanted me to figure out what was wrong with his lights I'd have told him a number to get started, which would have included finding out what lamps he needed, getting them, and installing them. I'd tell him I'd then have a better idea of what it would take to complete the project. If they were "Malibu or some other Home Depot style light" I'd have told him up front the sockets are probably bad and asked him if he wanted a professional style light installed. If not he'd be best to go back to home depot and get himself another set and start over.

While I won't say I never give a price on the spot, as a rule I typically don't. And if the job is somewhat of a moving target, I won't suggest a not-to-exceed if I am doing it T&M. Reason being this: If I bid the job I am held to that price if I make money or not. That's the risk I take for giving a firm quote.

If I am hourly then there is no risk of me not making my hourly rate (assuming we get paid promptly, etc.) unless I give a not-to-exceed # and the job goes over (which can easily happen). So there is a risk if you go over that limit, but no profit beyond your charge out rate. In my world I like to be compensated for taking a risk.

I worked on a T&M job (a local airplane hangar job comes to mind - complete with restaurant, bar, pilots lounge, conference rooms, jet fuel & av gas pump station, huge job 100k+ sq ft). The owner wanted a not-to-exceed price, or at the very least some idea of what it would cost. My boss at the time gave him niether because all planning was done last minute as he kept changing things around. That job started 4 years ago, and was open for business about 3 years ago. My old boss is still out there on a weekly basis, still doing it T&M because the guy keeps on adding & adding & adding stuff. If there had been a "not to exceed# " it would have killed him. Even putting any number on it would have been a mistake.

A not-to-exceed # is fine in some cases, but I won't go out of my way to suggest it. I would just as soon bid the job if it's not to much of a "moving target". And in the future I will watch my tounge before spouting out numbers.

It would have killed him if he gave the guy a not to exceed number with no scope of work. All my proposals include a scope of work and a note that additional work would be done at an additional cost. Changes equal change orders.

 

[wamegojim]

I would agree flat rate pricing is the way to go. However, as one commenter pointed out, stick with the price you quoted. Otherwise you will look bad in front of the customer and won't get them to provide a reference. Pricing on the spot is great in my experience because I expect my people to do the work then not drive off unless they are not really my customer. That is a hard lesson to learn, they aren't all a customer for me.

 

[jmsbrush]

There are many reasons to flat rate but I would like to give this one example because I see this almost on a daily basis. Many times when I run a call, the customer will tell me he has already had a couple of electricians come by to give an estimate. They told him they would get back with him the following day or two. Not all times but many times they don't even do that. This is an advantage for me. I discuss with the customer what his wants and needs are. I take out my Ipad and price the job right in front of my customer and explain to him what I am doing and showing him the prices. Most times I don't have to say anything. He or she says "when can you start?" If not, I look him right in the eyes and ask what does he think. When would you like me to start? I have him sign the iPad, do the work and collect the money. Life is sweet.

 

[Kdog76]

And the thing is, that's what people want. They want the price on the spot and do not want to wait weeks on end for you to show up. That's what keeps me going is giving a price promptly (on-the-spot or within a day or so) and being able to start reasonably soon (not weeks on end).