It’s a strange fact, but a fact nonetheless, that no one wins the race to the bottom in the home improvement industry. You put in your roof replacement proposal for $20,000, a competitor puts in his for $18,500, someone else comes in at $17,400, then, lo and behold, there’s the guy with a price of $13,500. The homeowner had broadly hinted that the company that gets the job is the one that will do the work for the least money. He calls you up and says: “Such-and-such company gave me a price of $13,500. Can you beat that?” What do you say?
To The Bottom and Back
I say See you later. The homeowner who’s willing to play this game, either because he believes he’s in control or because he’s cheap or both, is not worth dealing with. The irony is that the homeowner may have gotten a roof at one-third less, but he’s the ultimate loser.
Usually he doesn’t figure it out until the job starts to fall apart. The company who gets that job at that price is going to use the least expensive materials and take every shortcut known to man. They might not be flashing it correctly or at all, might not be using a starter strip or ice-and-water shield, might just skip the correct underlayment products, etc. Don’t even think about ventilation.
We see this every day. We’ve replaced many roofs in suburban New Jersey that were installed less than ten years ago. The outraged homeowner, of course, demands that the manufacturer make good on the 25-year shingle warranty and replace the roof. Good luck with that! The manufacturer sends an inspector out, then informs the homeowner that the roof wasn’t installed according to the specifications in its installation manual. The product warranty is void.
Now the homeowner has to go through the whole process again. He runs around the neighborhood grousing about what crooks contractors are, meanwhile soliciting proposals from a half-dozen companies so he can again play one off against the other and get the cheapest price on replacing his roof.
Had To Ask
Let’s say you get good at landing these jobs by lowering your price. You’ll be wondering at the end of the year where your profitability went and if you can afford another year in business. To stay profitable, you either have to raise prices or lower costs. Provided you’re not carrying some enormous overhead, you can only lower costs so much. And you can only run lean up to a point. Everybody’s paying the same for labor and insurance.
You have to know why your price is your price and stand up for it. For instance, I had a homeowner call the other day from a town not too far away saying he needed his front door replaced. He wants a price over the phone. I asked him to email me pictures inside and outside of the door. I loaded them into my software and he picks the door he wants. I tell him the price.
“Can you do better?” he asks. It doesn’t occur to someone in a nice restaurant to turn to the owner and say: I could’ve gone to McDonalds and gotten it for less. Why do they do this to contractors?
I said: “Did we just get transported to Canal Street and I’m the guy who’s standing there with six watches on my arm? If it makes you feel any better, I can hang up, change my name, inflate the price by 30 percent, then call back and drop it to the number I just gave you. But we’re still going to come to the same price. If you want to haggle, there are 100 guys who will take your money.”
“I had to ask,” he says.
So I pressed the button and sent him the complete proposal. His text arrives the next morning: “Let’s do it.”
Define And Market Your Difference
The way to avoid the race to the bottom is to stay out of that commodity thing. When homeowners think a roof is just a roof, vinyl windows are vinyl windows, and one siding job’s as good as the next, it leaves the cheapskate in charge.
If you’re looking for a differentiator, it’s usually right in front of your nose. Make the buying experience different from what people expect, and the installation experience different as well. Give them more customer service than they know what to do with. Now market that difference. People, at least people in certain zip codes, will definitely pay for that.
Part of the reason that front door customer was drawn to us to begin with was because we can conduct the sale and transaction without having to come out to his house. In a market where most companies are still pounding people down for three hours with a one call close, that’s a differentiator.
People who don’t want to sit through a long sales presentation know that they can read our online reviews, contact us to discuss the project on the phone and in an online meeting, and make a decision at their own pace. They don’t have to tear up the week’s schedule to meet with four different roofing, siding, or window contractors. We also give them line item pricing so they know what every part of what they’re buying costs.
What we’re working on now is a system similar to Amazon’s so that customers get a link showing them where and how their windows were built, a text telling them when the product left the factory, another text telling them that the product’s arrived, and another one scheduling the installation appointment. That may not be how everybody does it, but it’s the way we’re going to do it, and it’s what homeowners expect from the professional companies they deal with.