Small Business: The Art of The Deal
Ever wonder if anything sells at “full price” anymore? Every year we’re bombarded with Black Friday specials, BOGO bargains, Slasher sales and more. We see online sellers offering prices far below retail price and brick-and-mortar stores cutting costs and prices in a mad dash to compete. Giving buyers - and that’s what every one of your customers is - a sense of value or savings has become integral to doing business. This is especially true in the crowded field of plumbing.
Today’s customer feels entitled to save money on every purchase, or feel as if they are getting more for their money than they “should.” The days of creating a straight-forward pricing program to cover materials, time, and provide a bit of profit are long gone. More and more often modern pricing must be calculated to allow for wiggle room and negotiating while still turning a profit, or risk losing potential customers.
Yes, many in today’s plumbing industry find themselves in no-win situations. If you price “by the book” with no discounts allowed you risk losing jobs to heavily discounted competition or even offending your customers. If you offer too many discounts or your discounts are too steep and not thought out properly, you risk losing money and actually establishing a lower price point for your work making it harder to increase prices later. Neither scenario is preferred.
So what to do? Welcome to the Art of the “Package Deal!”
By offering multiple services in discounted bundles under one price you can achieve several results. It becomes more difficult for customers to relate a single price to a single service to try to devalue it or compare it to others. In this way, you can convey a large sense of savings by touting the value of the combined services. For example, if you offer two services that would normally cost $50 each in a bundle for $79.95 - that’s a “$100 Value” for less than $80.
Bundling items also helps sell additional services that could normally be overlooked and not considered. If hiring you for Service A normally costs $50, your customers may not add Service B at another $50. If both services are presented as a bundle for $79.95 the perception is that Service B is now heavily discounted and something they should take advantage of.
In the long run, selling multiple services in one package means a greater upfront return on your cost of acquiring a customer!
In It for the Long Run
Another route to avoid over-discounting is by adding services or turning one-time services into ongoing contracts. By creating a low upfront introductory cost for an initial service with an ongoing (closer to standard) cost to maintain or provide another consistent service you feed the customer’s need for savings without devaluing your work.
The concept of value-added services is time-tested and can go a long way to bolstering your resume against competition regardless of price. Give your customers a tangible sense of value in additional services rendered unavailable elsewhere.
It’s Not Always About the Money
Customers can feel they have found value in more ways than monetary. Many companies successfully charge higher prices and their customers pay those prices for the sake of a worthy cause. When a portion of proceeds or profits are designated to charity or a particular cause, the emotional satisfaction a customer feels in knowing they are doing their part to help (but do not have to inconvenience their everyday life) is immeasurable.
Likewise, simply offering more than your competition can also go a long way. For the sake of convenience customers tend to like “one stop shopping.” If you can offer services beyond your field by hiring or by partnering with other companies, you create a peace of mind for your customers knowing you can help take care of all their problems from start to finish.
The bottom line is be flexible. Be open. While the Art of the Deal seems to be getting out of hand with beyond wholesale level deep discounts, there are still ways to maintain the value of your work and offer something your customers are willing to pay for!
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