Dealing With Cheap Clients: When To Drop Your Price Or Say No
When someone says they want the cheapest price, should you drop your price or just walk away? Today, Sam Wakefield discusses the psychology behind how to sort the client that wants the “down and dirty” price. He’s going to be unpacking that and talk about a couple of different scenarios where that might apply and how to effectively use this verbiage to decipher what they’re really telling you and to listen between the lines.
Dealing With Cheap Clients: When To Drop Your Price Or Say No
We’re going to be discussing when somebody says, “I’m just looking for the cheapest price.” There’s some psychology and a way to filter that to easily figure out if that is just a smokescreen for you to see if you’ll drop your prices or if they are truly adjusting looking for the absolute cheapest thing they can find. That is what we’re going to talk about. We’re going to break it apart a little bit, unpack that, and talk about a couple of different scenarios where that might apply and how to effectively use this verbiage to decipher what they’re telling you. It’s to listen between the lines as I like to say. That is definitely a huge thing with sales, especially in home sales, is listening to what they mean. A lot of times clients and people in general, they’re going to smokescreen what they mean. They’re going to tell you these things because part of it is that’s the way they’ve been trained. That’s the way they grew up, depending on what culture they’re from. There are some cultures around the world that it’s almost as if right alongside math and science in school, they have a negotiating class in their elementary school.
It’s okay and it’s great and you need to be able to effectively counter those negotiating tactics and principles and learn how to unveil what they want. A good example, this comes from a guy on my team, Dan. Thanks for this, Dan. We were talking about it in our meeting. He had a client that was getting back to him with, “I’m not so sure about your company. I’m looking for a cheap price here.” Anytime anybody says that, if they even come back to you with that, they’re still interested in your company. They’re just trying to negotiate your price down. You haven’t shown them everything they’re looking for. There’s a possibility that you haven’t increased your level of certainty with them to the fact that they’re confident in your company. They’re maybe not 100% confident in you as the representative. Maybe they’re not 100% confident with your project. This is how you handle all of that and what to do with it.
With this verbiage, what you’re looking for is anytime anybody says, “I’m looking for the cheapest price,” you’ve got to clarify that because there’s a difference in cheap and value. There’s a difference in cheap and low price. With that, what I like to do is instead of saying, “I understand you’re looking for the lowest price,” or something like that, actually use a lot more clarifying words. Be very descriptive in how you describe that. Say, “Are you truly looking for the low-down, dirty, rock bottom, cut corners, scrape the bottom of the barrel price? Or are you looking for the best value for your dollar?” This is going to do two things for you use those kinds of descriptors when you respond if you’re in person, if it’s email, if it’s text. However, if you’re on the phone say, “I want to be clear on what you’re asking me for. Are you truly looking for the low-down, dirty, rock bottom, bottom feeder, scrape the bottom of the barrel price? Or are you looking for the best value for your dollar?” What this is going to do, the people that are truly looking for just the cheapest price and they don’t care about quality, because you’re going to have some of those clients. You will have clients who literally don’t care about quality if they have to do this every few years, but they are installing the cheapest price. They’re okay with that.
You have to come to terms that there are those clients out there and they’re not the ones you want. Because when you sell that project, those are the clients that are going to complain the most. They’re going to find the most things wrong with your installation. Even if it is impeccable, even if it’s textbook, they’re going to find some stuff wrong with it and you’re going to have go-backs and you’re going to have complaints. There’s a good chance you end up with a bad review even though they were the ones that beat you up on the price. They were the ones that made you drop the bottom out. Don’t do it. Don’t fall for that. You’re going to have those clients.
This is going to differentiate the people that are truly looking for that. They’re either going to move on and not respond back to you, which is fine, or it’s possible they could get mad a little bit about it. You’re calling their bluff. You’ve got those clients and if that’s truly what they’re looking for, let them go. Bless and release. They can be someone else’s headache. However, this is the important part, and this is where the sales psychology comes in. You will have those clients, and the majority of them actually are clients who are looking for better value. They may be not necessarily are interested in the lowest, cheapest price system you have, but that was just their way of having a smokescreen of getting you to drop your price on some of the other stuff that they’re looking at.
For those clients, when you tell him that, it’s your takeaway because they’re going to come back to you with, “That’s not what I’m looking for. What I’m looking for is the best value for my dollar, the best value for the project. I don’t want you to cut corners. I don’t want you to leave things out. I am looking for a better value,” and that re-opens the negotiation. That opens the ability to have that conversation with those clients because they understand that you see right through their smokescreen. You basically labeled it. Tell them upfront, “We will never be the absolute cheapest company nor would you want us to be the cheapest company, because the things that I would have to leave out in order to make that price happen, you wouldn’t want me to leave out. I decided a long time ago not to skip steps and be proud of my price because it’s for quality work. If somebody else’s coming in and offering you a system $1,000 or $2,000 less than I am but it only lasts half as long. Have they saved you anything if you have to do it all again and again every few years and you have maintenance issues along the way? It doesn’t cool or heat the way they say it’s going to. Have you gotten a better deal or did you just buy yourself a headache?”
When To Drop Price: People who go for price instead of value and quality end up with a project and that is nothing but a headache that’s giving them nothing but problems.
It’s clear. You’re just like, “I’m not making this up. You can Google search this stuff. It’s exactly what happens. You have thousands and millions of people who have given bad reviews for this exact same thing. They took their price and just went off of price instead of value and quality and then they end up with a project and with a system that is nothing but a headache and it’s giving them anything but problems.” I love quotes. Quotes are very powerful. There’s a quote by Benjamin Franklin that we have on the back of every single one of our business cards, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.” It’s super powerful and it’s even on the bottom of every single email that we send because we don’t want to be the cheap person.
The example is you can sell ten systems that are your basic efficiency systems, your builder-grade stuff, or you can sell one or two high-end equipment and earn more money, have more net at the end of the day than ten of the basic ones and you worked a lot less. That’s how you work less and earn more. That’s exactly what this show is about. That’s one of the key principles and premises of this. This is not about working your face off until you don’t see your family and you never get to take a vacation and all this stuff. This is about being efficient and managing your time by upping your ticket price, upping your sales numbers, up your close rate. You could have the same number of leads and if you upped your close rate and you upped your ticket price, you’re going to earn a dramatic amount of more money. An example and I’ll just pull from my own life, where I’m at now from the first year to the third year. I have the same number of leads, but I gave myself a $50,000 raise by changing the number of my close rate and changing my average sell.
Those are the only two things that changed. That average number of leads was about the same. When you do that, you dramatically change your bottom line and it’s awesome when you see that happen. Every single one of you can do that by applying some of these skills, these techniques, these principles and it’s going to change the way that your customers interact with you. The other thing that happens when you communicate like this, when you communicate very clearly because crystal clear communication is crucial when we’re making sales, especially for something that it’s a high-ticket item. We are high-ticket closers. You see Dan Lok all over the internet. If you’ve never heard of him, look him up. He is the High Ticket Closer, they call him. He’s talking about high ticket closes of $2,000 to $4,000.
I laugh when I see those because in our industry, high ticket closing, our threshold to start is $6,000, $7,000 for a complete system. Commonly, every single day, I’ve got one I’m working on, that $37,000 is what we ended up at. You would commonly do $10,000 to $50,000 projects all the time because in this industry, we educate, you offer services, you offer all of the extras so people can say, “I like this but I don’t like that. I understand the benefits here. Thank you for educating me. Thank you for taking the time.” I don’t know how many times I can tell you. They’ll be able to tell me, “Thank you for taking the time to educate me on what all of this does and what the problem is, and how you’re going to fix it because no one else cared enough to take that time. That’s why I chose you.”
You’ve got to do the due diligence and explain things the right way, but in a way that they can understand it, a way that they know what’s going on. The other thing that happens when we are just completely transparent in that conversation when you’re like, “Are you looking for the down and dirty, rock bottom, bottom of the barrel, low-ball price? Are you looking for more value?” That not only weeds out the people that are truly looking for that, that are just the cheapos, and then the other people that come back and say, “Let’s talk because I like your company. Let’s see what you can do.” Also, in that transparency, what happens is you’re basically opening up and say, “I’m here to help you, but I’m not going to cut corners to do it.” It boosts your credibility as a company. It boosts your credibility as a representative and basically telling them, “I’m not going to compromise my quality because you asked me to. I’m not going to compromise my quality and my service just to win your sale.” By doing that, the impression that you get, that you give off is, “I need people. I don’t need a single sale. Your one project is not going to make or break my success. I am a quality representative of a quality company with a quality product. If we win or lose your project, it doesn’t make any difference to me because there will be others. There’s always more waiting who want quality work.”
When that is the vibe that you’re giving out, it’s like when you see people in the dating scene and you can smell desperation a mile away. When somebody is desperate, there’s not a date in sight. It’s like a wasteland. It’s a desert out there. The second that you take yourself off the market and you have that whole, “I don’t care,” attitude. That’s crazy. There are dates everywhere. Everybody wants you. It’s the same thing with this. If you are desperate to make a sale like, “What’s the other company doing? I can match that price or I can drop my price even lower. I guarantee you I’ll beat it.” What does that sound like? That’s horribly desperate. I had a guy call me. I gave him a quote. We’re working on the final details of it. He’s like, “I wanted to tell you it’s a big project. I’m getting other quotes and they’re coming in cheaper than yours.” I said, “I’m sure they are. Because I’m going to be transparent with you. Here’s what’s going on. This year 2019, not just global, across the country, the market is down a little bit. What’s happening is it’s a slower year than the last several.
When To Drop Price: Communicating with a level of confidence is about knowing that your price is the right price for the amazing level of quality and service that you’re offering.
You’re comparing all of this, what you’re going to see happen is there are companies out there that are so desperate for work that they’re willing to drop their prices to crazy amounts lower just to get any job. The things that they’re cutting out for your project, I would never do so. Let me help you compare the quality of work because what we’re talking about is not an appliance. If you went to Lowe’s or Home Depot and you buy a refrigerator and you plug that sucker in and it doesn’t work, you can blame the manufacturer. You can blame Kenmore or Bosch or whoever made the refrigerator. What we’re talking about here is a lot different. This is like buying a Ford F-150 and having it delivered to your front yard in 1,000 boxes. It’s up to you to hire the company who’s certified and qualified to put it together and not have missing parts left at the end, not have extra screws and components because they didn’t know where they went. That’s why our prices are where they are and that’s the quality of the project you’re going to get.” That’s straight up on the telephone and he’s like, “You’re totally right.” I was like, “If their systems don’t last as long, you haven’t saved anything because you’ve got a headache now and it didn’t accomplish what you wanted it to accomplish.” At the end of the day, it’s never about the price. It’s about the quality of the project and doing it right.
When you communicate on this level, can you hear the confidence in my voice? You have to be connected to a company that you know the quality of the installation is that good. You know the quality of service behind it is that good. You know your design is that good and you’re only going to offer the best of what you can do. Do your best and forget the rest. When you have that type of conversation, the confidence in your voice comes through. You don’t have to say, “I’m competent.” You just are. It’s about belief. It’s about knowing that you’re offering the right thing for the right purpose to the right people and knowing that your price is the right price for the amazing level of quality and service that you’re offering. That is the rest of that conversation. Ask them, label it. That’s called as-is-ing it. I’m going to call this as it is.
Are you looking for that low down, dirty, rock bottom, bottom of the barrel price? Are you looking for the best value for your dollar? They will absolutely clarify and they’re going to sort themselves for you so you don’t end up with the bottom feeder who just wants the cheapest price and doesn’t care what corners are cut that are only going to be complainers. You’ll find that a lot of the people will come back to you and the bigger majority will come back to you with, “I do want the best value for your dollar. Thank you for explaining it like that. No, I don’t want you to cut any corners. What can we do? Let’s work together to come up with something that works.” That’s exactly how to have that conversation and it’s extremely powerful.
I would love to hear from you about what value you got from this. What was your biggest takeaway from this episode? Shoot me a message at Sam@closeitnow.net. Go to CloseItNow.com to stay in touch. The coaching program has begun. We’ve got group coaching, we’ve got private coaching, and watch out for some events. I’ve got some events coming up that are going to be amazing. They’re going to be rockers. Shoot me a message if you would like to discuss, do a three-day boot camp for your organization because my sell system is proven start to finish from soup to nuts, from the first call to the close every single time. That blind date to a marriage proposal in less than an hour and getting the ring on the finger. That’s the Close It Now system. If you got value from this, share it with someone. I would love to hear your feedback. Until next time, I will talk to you soon.
