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Should you explain pricing to customers?

FieldPulse | April 23, 2018

Customer PricingIt’s never easy to have to defend your pricing to customers and prospects. So to make that conversation easier, it’s important to align your customer pricing with the value provided.

When a customer needs specific services, they usually start by asking about pricing. For instance, a customer contacts you to come over and provide an estimate for a plumbing repair. You bring your industry knowledge and tools, assess the damage, and offer a quote.

The customer seems shocked and says they will get back to you – but, you never hear from them again. They’re probably calling your competitors, asking for a price. Nonetheless, you know what your competitors charge, and you are not price gouging.

As a result, you have to wait on the customer to realize that you gave a standard quote for the work expected. How can you better manage these types of situations? Continue reading for ideas to try in your business.

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Determine the root cause of the price shock

Some customers feign shock in hopes of getting a lower price than what was offered. But, you have your own costs to cover. If you bid on the lowest price for every job, you won’t be able to afford to keep your doors open for much longer. Still, there are many reasons why customers may think your price is too high. Here are some questions to answer:

  • Were you able to fully explain the value offered for the price?
  • Does the customer see value in your services?
  • If not, why not?
  • What is the customer comparing your price to?
  • Should you show the customer a comparison of standard pricing structures for your industry?
  • Have you done your due diligence when setting up your pricing?
  • Did you point out the key benefits of your service?
  • Did you offer testimonials to put the customer at ease?

According to a Walker study, customer experience will be a key brand differentiator – over price or product – by 2020. Are you able to convey the value of your customer experience? On the other hand, you also have to figure out if the customer is a good fit for your services.

Research the customer’s purchase and conversation history in your CRM system

Using your CRM system for research is essential, especially when the pricing objection comes up. It’s critical to understand the customer’s history with your company – including past purchases and conversations. This is where you can search through every customer encounter, to help show true value.

If you see that they only used your services as part of a larger package, such as a remodel, then explain to them how that pricing structure works compared to individualized repairs. If possible, you might even compare your charges for the remodel vs. one specific service call to show there is very little difference.

The last thing you want to do is to wait for the customer to call you back. It’s important to lock down the job right now – as long as it is a good fit for both parties.

Explain that many customers consider some repairs as an expense, but if it keeps your home functioning correctly, and the house dwellers happy, then it is actually an investment. No one wants to live with a broken toilet, A/C unit, bad wiring, etc…

This is especially true if the customer is thinking of eventually selling the home – in that case, keeping everything working properly is crucial for resale value. The important thing is to listen for the real objection so that you can respond appropriately.

Consider itemizing your pricing

The customer has something that needs to be fixed right away. They understand you have the right tools and experience to fix it, but they may not comprehend the reason behind your pricing. In this scenario, it could benefit both parties to provide an itemized quote.

This will be an education for the customer that can pay off in the future when they continue to select your company for various jobs. When you submit your quote, include prices for all the materials needed.

You might even have to explain why you have chosen one brand over another, or why a specific tool/material is needed. Explain these things as logically as possible so that the customer can see things from your perspective.

After that, you might need to detail the reason behind your specific hourly rate. Some jobs are quite dangerous, and you must have certifications and specialized training/schooling/experience to work in your particular field.

You have to explain why certain jobs are hazardous and require a fair hourly rate. Itemizing the costs, line-by-line, may not give the customer a lower price, but they will have less of a reason to argue.

Focus on the customer’s outcome

Keep the client focused on how they will benefit from your services. Help them to picture the results and what that means in terms of what they will spend. Customers aren’t always “buying” something as much as they consider a purchase an “investment.”

If you help them see it in those terms, then it helps them to think in terms of their return on investment. When customers try to argue for a lower price, they are not thinking of the real value of the work.

Inspire urgency

If plumbing is malfunctioning, if the A/C isn’t working on a 100-degree day, if anything else is wrong in a household, then the customer already has a sense of urgency. At the same time, they want to get the best price – as would any consumer.

You might ask what they’re comparing your price to. Another thing to ask is if they can afford to put these repairs off any longer, and, tell them why they can’t ­– using your expertise of the situation.

Explain how much more money they can lose if they let the damage linger any longer. And, again, refer back to your itemized pricing (that you’ve based on industry standards).

Handling customer pricing objections

Every service call can be different, with varying sets of requirements, tools, and safeguards. An itemized pricing structure, customer research, value description, and the ability to listen to the customer will help to ensure you get the job regardless of the price objection.

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