Bidding low to get the job

I occasionally hear a painting contractor ask if it makes sense to offer low “introductory” prices to help build a new painting business, or “get their foot in the door”. I vehemently discourage using a low bid for such purposes for several reasons.

First, statistically 90% of the painting contractors starting business this year will fail within 5 years. One of the biggest reasons is not charging enough. A low bid will not make you money.

Second, charging low prices will develop you a reputation as the “cheap painter”, which is hardly an effective means for charging a reasonable rate. A low bid gives you an low price reputation.

Third, once you have “introduced” yourself at low prices, you will have a hard time raising your prices for past customers.

The bottom line is that low bids aren’t good for the bottom line. In the short-term you won’t make money, and in the long-term you will have a difficult time getting the prices you need to make money.

Long term success is achieved by offering superior value to the consumer. If you try to compete on price– even for a short period– you are inching toward the unemployment line. Instead of offering low prices, offer greater value.

Market your company as superior in customer service, dependability, convenience, or something else. Differentiate your company by offering better value, not lower prices. And then learn to communicate the value you offer and sell at a higher price.

If you look like your competitors, you will likely wind up in the same place they will.

The customer wants a hole

How well you identify what your customers want will ultimately determine your success as a salesman. You may think that sales is a dirty word, but the fact is, without sales your business won’t survive, much less thrive.

From E-Myth.com:

You may have heard the saying that a customer who buys a drill from you isn’t actually buying a drill, they’re buying a hole. They don’t need a drill, they need what a drill provides, which, of course, is a hole. This is equally true for your business regardless of what you believe you are selling. And when it comes to effective and successful lead conversion recognizing this distinction can make all the difference in the world.

In the context of a painting contractor, customers can be buying a lot of different things. They might be buying an exciting new décor, or protection for their home, or maintenance services. In other words, customers buy paint jobs for different reasons.

As a salesman—and we are all salesmen—we must identify what it is that the customer is buying. If we make assumptions and try to fit all customers into the same box, we can find ourselves attempting to sell the wrong thing. You might be trying to sell a plug, when the customer really wants a hole.

The primary cause for this mistake is poor communications. This can occur in either direction. Many times the customer is uncertain as to what she wants or what her options are, but more often the fault lies with the contractor. Too often the contractor spends more time talking than listening, more time telling the customer what he can do than trying to identify what the customer wants or needs.

No two customers (or jobs) are exactly the same. A myriad of factors are at play, and our job as a salesman is to sift through the information to find what really matters. Not only does this help us provide the customer with the job he really desires, it also differentiates us from competitors.

I have said many times that sales is primarily an educational process, and that education is a two-way street. First we must educate ourselves regarding the customer. Then we must educate the customer regarding our solution to their problem.

Learning about the customer is sometimes an easy task. The customer is outgoing and volunteers information. Other times it can be like pulling teeth from a German Shepherd—a nasty altercation that can leave us with cuts and bruises. But if we have a process in place, we can often turn that snarling beast into a lovable little puppy.

Most people like to talk about themselves. Our process should encourage this. Ask questions, and listen to the answers. Engage the customer and let him talk. Then, and only then, can we find out if they want a plug or a hole.

How should I…?

I frequently see contractors ask how to deal with a particular situation regarding a job. Typically, the question involves a product choice, preparation methods, or something similar. These are legitimate questions, and seeking the input of other professional painters is a good approach. However, these questions are often asked just prior to starting the job. In other words, the contractor has bid the job and is now attempting to address specific issues regarding the job.

This is the wrong time to be addressing these issues. How could he possibly bid the job accurately if he is uncertain what product to use or what prep to perform? In short, he can’t.

An estimate is the total of labor and material costs to perform the job. If the contractor does not know either, his price is not going to be accurate. This type of estimating is extremely risky, and those risks extend far beyond the potential financial issues.

For example, what if the customer prefers a particular product? What if the customer expects certain preparation? In other words, what if the customer’s expectations are different from those of the contractor? When such issues are not addressed prior to the start of the job—and in writing—there is a good chance that the customer’s expectations will not be met.

Unrealized expectations are one of the primary causes of disputes between customers and contractors. The contractor must identify the customer’s expectations prior to submitting an estimate. Doing so allows him to: 1. Establish reasonable expectations if the customer is being unreasonable; 2. Estimate the job accordingly.

Customers do not purchase professional painting services every day. Their expectations may be based on something they have read, the advice of a friend, and simply fantasizing. Those expectations may be reasonable, or they may be completely insane. But we don’t know until we discuss this with the customer. If the customer’s expectations are unreasonable, we can educate the customer as to why. If our attempts at educating the customer are not successful, we can avoid future problems by not submitting an estimate.

2. If the customer’s expectations are reasonable, but perhaps involve more work, we can bid accordingly. Suppose the customer wants all of the paint removed from her doors. While not necessary, it can be accomplished. You will want to include this in your price.

It is generally quite easy to determine the customer’s expectations. All you need to do is ask. I often ask the customer what kind of quality he is looking for. I explain the options and let him choose. Sometimes I will give him separate prices for these options. In either case, I am careful to specifically state what is and is not included in the estimate.

I doubt you would buy a new truck without identifying what is included. You shouldn’t sell a paint job without doing the same.

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