From my perspective, price alone isn't the main reason most jobs are lost. If a job is lost on price, it's because the contractor did not create any value in anything other than price.
September 11, 2012 by Mike Draper
I am tired of hearing from contractors about losing jobs on price all the time. Price, price, price is what I hear. Sure, homeowners want a good price. But they don’t want crappy workmanship either. There aren’t many Canadian Contractor readers out there that do crappy work, but some contractors still use price as the single biggest reason that they lost a job.
From my perspective, price alone isn’t the main reason most jobs are lost. If a job is lost on price, it’s because the contractor did not create any value in anything other than price. If there is nothing else but price that differentiates one contractor from the other, then price is the only thing a homeowner can use to make a decision.
So, the next time a homeowner wants a price, look for why they want to renovate and ask them how important safety, warranty, job site cleanliness, experience, follow-up service, security and the like are to them. Ask them to list all of the factors that are important to them and rank them from most to least important. If nothing else matters to them other than price, you might want walk away and let the other contractors fight over price unless you are confident that you can make money. There is no point in doing work and not making a profit.
Go find a homeowner and sell to the other needs of that homeowner. Don’t get me wrong, price is important. And, you have to be competitive withthe rest of the market. However, if you can’t sell enough benefits to justify 5 to 10 per cent more price than your competitors, then you have zero competitive advantage and differentiation. You better go to work on your strategy and Unique Selling Proposition, because you are not likely to ever make much money!