Subscribe to our newsletters & stay updated
Numbers and words are important for those contractors who intend to succeed in their PHC service contracting businesses.
Regarding numbers, it is important to realize the true operational cost that you incur in serving the public if you want to bring in more money than it costs you to be in business. That’s just plain common sense. If you don’t identify and calculate all your true tangible and intangible business costs, you will come up with the wrong numbers. And wrong numbers can only produce wrong results.
You only have three choices regarding the prices you charge for your services. You can sell at your cost, below your cost or above your cost. But if you don’t know your true operational cost, you won’t know which of those choices you’ve made until it’s too late. And two of those choices do not allow you the opportunity to be successful.
Also, did you ever contemplate the importance of words in addressing consumer questions? Use the wrong words or spout a wrong phrase, and you could lose the opportunity to close a deal for your services.
Even if you have identified and calculated all your numbers in a correct and proper fashion, if you don’t come across as someone who knows what they are talking about, you may not be able to apply your brilliant number crunching into bringing money to your business.
Addressing consumer questions requires knowledge of the subject, intelligence, truth and prompt answers that will give consumers confidence in your ability to address their needs and requests.
Explaining contract pricing
Consumers want to know the price they must pay for any service before authorizing you to perform said service. That’s why a contract pricing protocol is better than a time-and-material pricing policy. As a consumer, I’m sure you really agree with that thought even if you implement T&M pricing in your contracting service business.
With T&M pricing, consumers will want to know your hourly rate. However, that doesn’t give them the total amount they will have to pay for your services — it gives them a big question mark. That’s how arguments start when you present the final bill — how much time it took you to do the job and the prices you are charging for material that they found on the Internet for less than you are charging, etc.
With a contract pricing protocol, you can greatly lessen the propensity for those types of arguments since the consumer would know the price before they gave you the OK to do the job.
The following are intelligent, truthful and quick answers to some of the consumer questions that appear in my book, “Solutions Management Theories and Methods for the Contracting Business.”
I encourage you to mention the consumer’s name in the places where I have included; adding a personal touch is always a good trait to employ in sales.
Q. What is your hourly rate?
Your response: “We do not charge by the hour; we charge by the job. Think about it (caller's name); you don't want to pay by the hour. You want to know the cost of the job before you authorize the work to be done.
“When you pay by the hour, you don't know the cost until after the job is finished. If the person performing the work is slow or unfamiliar with the task you need performed, you (caller's name), will be paying for that slowness, inefficiency or lack of ability.
“If you pay someone by the hour (caller's name), it would be in that person's interest to stretch the job as long as he could. This would cost you more money.
“Using a contractor who charges by the hour is like ordering a meal from a menu with no prices. When it comes time to pay, they both may be hard to swallow.”
That certainly makes more sense than telling the consumer you will do a good job and then blindsiding them how much they owe you after you are done with the job.
No quotes over the phone
Once you have established that contract pricing is far superior to T&M pricing for everyone involved, the next natural question from the consumer would focus on the cost of the job. That question is often presented during the initial phone call to the contractor.
Note: Putting aside the fact that the consumer is only contemplating having work done and only wants an idea of the cost, most times this potential customer wants to compare different contractor prices. No contractor has the ability to see all the circumstances involved in doing the actual job from his phone.
Even though picture phones exist, measurements and that which were not shown over the phone must be seen in person. Therefore, the contractor cannot give the actual price over the phone.
Any contractor who quotes prices over the phone gives the customer potentially flawed information, which could end up in an argument once the job is seen in person. If the price then increases, that contractor will probably not get the job at the proper selling price, if at all.
Q. How much do you charge for (any job)?
Your response: “In order to give you the price we will charge, (caller's name), I must see the job to determine the model you have requested is proper for the application; check the location in the building for position, accessibility and difficulty or ease to set the material/equipment requested; and determine whether the adjacent material is in a good state of repair and will not cause a problem for the new material/equipment.
“It's possible that the wrong material/equipment was installed initially or the state of the adjacent material may have caused the problem you are experiencing.
“If you give me your address, we can set up an appointment at your convenience and quote to you the price to do the job. If I see any other way to address your request, I'll also quote that price to you.”
With this response, you would reinforce in the consumer’s mind that you know what you are talking about regarding his request or need while being intelligent, truthful and expeditious with your answer.
Handling distrustful customers
But addressing consumer questions in this manner does not get rid of 100 percent of price arguments. About 1 percent to 2 percent of misanthropic consumers out there will argue about the bill, even after they agreed to the price before you did the job. They may have found another contractor who says he would have charged less. That type of distrustful person might say:
Q. I was told by (my neighbor, another company, whoever) that I paid too much for the job you did for me. I could have gotten it cheaper, and you ripped me off.
Your response: “It's ironic that after you buy anything, there's at least one person who could have gotten you a lower price for the same product or service, but they are never around before you make your decision to purchase.
“You said you paid too much; however, the fact is you paid only that to which you agreed and authorized prior to commencement of the service being performed.
“You said you could have gotten the job cheaper. That's certainly possible. Whether it would have been of the same caliber is questionable. Cheaper is never cheaper. More often than not, top-quality workmanship can be less expensive than a cheap job.
“The truth of the matter is that you, and you alone, chose to have our firm perform the task at the price to which we both agreed. This obligated our firm to fulfill the agreement in good faith. Furthermore, we never agreed to do it for less.
“You, in turn, were obligated to fulfill your part of the agreement by paying our firm for the service performed. Therefore, no one was ripped off. We both entered into a contract and fulfilled our respective obligations under the terms of that contract.
“I hope my response addresses and satisfies your concerns.”
When you speak with intelligence in a calm, truthful and rapid manner — with the facts to back you up — you have preserved the dignity of your business, even if that consumer never uses your company again.
When dealing with the public, always remember to choose your words carefully since words are important to the success of your contracting business.