Builders Oversights That Lose Money #2 – Discounting
the-successful-builder-Builders Oversights Guaranteed to Lose Money #2 – Discounting
In the current building market is seems that you just have to discount in order to land enough renovation jobs to just survive. Right?WRONG!Right about the “just survive” bit, because when you discount survival is about all you manage. Discounting really is a race to the bottom. And when recovery hit the building industry in your area with a vengeance, then there may be nothing in the bank to finance your growth!So here are a few tips to help you quit discounting.
1. Decide that you can’t afford to discount
Unless you have heaps of spare capital sitting around, that you can draw on to tide you over several years until “times get better,” make the decision that you cannot afford to discount anymore. It’s a bad habit to get into at the best of times, and if you do it for too long it can become a habit that’s hard to break. Sure you do have to adjust your prices to meet market conditions, but that is quite different from getting into a discount war against another builder. Do that and you both lose? Go on. Make the decision.
2. Re-evaluate your service.
Make a (long) list of all the things you provide for your clients that are not in a typical estimate. The thing is, if you are a good builder, you actually provide your client with many things that they don’t pay for. So, increase the value of your estimate by letting them know all the additional things you provide.
Example. My dog groomer chose to get his new-build project from a certain company because they could easily modify their standard plans to suit his requests "at no extra cost." They told him, “we’re all designers, so what would you expect?” Unfortunately their literature didn’t say this, so I wonder how many other potential clients they had missed out on.
3. Determine to walk through the fear (of missing the sale).
This is the hard part because it’s so personal. Yet it is an absolute requirement if you are going to rise above the discount mentality, because facing fear head on is the only way to overcome it. Sometimes you just need to talk to someone who has done it before to know it is OKIt takes courage to stick to your prices, but if it ensures you retain decent margins and make decent money, then it’s worth learning to do. Right?
Question
So how is your building sales program going? Are your client’s pushing you to discount? Have you failed to close deals recently? I’d love to hear how you have overcome discounting, or what you’re struggling with.Post your comments below
Graeme
P.S. Whenever you’re ready….here are 4 ways I can help you grow your building business:
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