Price Matters – But Slashing Costs Won’t Win You Work
Updated: Oct 29, 2021
It’s notoriously difficult for tradies to compete, because other trade businesses out there slash their prices and often do cashies. These things make it difficult for you to price your own work, as your competitors are not genuinely working to profit margins.
It becomes more essential for you to not just compete on price then: you have to pitch your proposals (or quotes) to showcase both the value and the quality you offer.
Any business coach, pricing expert or quantity surveyor will tell you that against what you might assume to be true, clients do not make purchasing decisions on price alone.
Yet clients tell you they buy based on price alone all the time, right? This is probably one of the most common reasons a client who declines your quotes gives you to explain why a competitor is chosen over you.
Is it true, though?
Here is a real-life case study to remind you to think twice before you slash your price.
A couple from Taranaki obtained quotes from 3 tradespeople for some custom high-end joinery work for their kitchen. This was their pride and joy to finish a 6-year renovation project. They wanted a perfect, high-end finish.
All three quotes varied in price with one significantly lower than the other two. Yet this couple didn’t decide to book the cheapest tradesperson. They didn’t buy on price. They bought on emotion and perception of quality based on the price.
Why didn’t they go for the cheapest price? It was because they believed that this quote came from a “cashie on the weekend” kind of outfit.
What were the warning signs (and which you should avoid)?
The “quote” was sent as a one-liner email with a simple dollar figure. This told them it was not a professional outfit (this is your cue to check you have decent email communications!)
The tradie didn’t take their calls during the day when they tried to reach him, instead texting back. This itself wasn’t a huge warning sign to the couple as tradies are often busy during the day, however, when they did hear back the suggestion was always to chat either after hours or on a Saturday morning.
They felt that this tradie was working a day job for someone else, had no idea how to price and wanted to earn some extra cash in hand that would not be taxed or subject to all the overheads of a reputable trades person.
This couple didn’t choose the cheapest quote for their $15,000 job because ultimately, they wanted quality for the custom work on their cabinetry. It was the product of 6 years of building, design and saving up to get their home renovations completed in stages.
They bought on the emotion that they wanted quality and professionalism. To them, this costs more.
So, if you’re thinking of slashing your prices to ‘win’ that job, reconsider. Pricing is partly art and a big part perception. If your pricing is rock bottom, you run the risk of being perceived as unprofessional. This does not win work and if it does, paints that first impression of a business that will always buckle on price to ‘win’ the customer.
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