As inflation continues to increase and put pressure on homeowners and contractors alike, it's not uncommon to hear that your price is too high. This often leads business owners to try to cut costs to get business. But, as we all know, there are limits to that, and as materials costs continue to skyrocket that can be a race to the bottom in terms of business growth and ultimately your income.
So what do we do?
One answer is to handle the objection in a way that helps the homeowner understand the value of the services provided. Messaging and presentation go a long way, but a simpler alternative is to use anchor-based pricing.
To use this science-backed methodology, simply create a higher priced option than the estimate that the homeowner originally desired and present that to the customer first. That higher priced option should be priced significantly (typically 2-3x) higher than the original option.
Why does this work?
Human beings aren't actually good at numbers. What we are good at is comparing things — big vs. small or the distance between numbers. Using a higher option will make the lower option number look smaller than when compared against no other options.
This is a tactic commonly used in auto sales where a car is presented at a very high price ($150,000), making the $60,000 car with many of the same features look like a bargain in comparison.
There is a caveat though — people also make pricing decisions based on how much they think things should cost. How do they know what something should cost? They do it based on who got back to them first.
So, to win the race at pricing, respond quickly, providing an estimate in person if possible, and present them with the highest cost alternative first. They'll use your higher cost alternative to measure all other offers, including your lower cost alternative.
Estimate Rocket makes option-based pricing simple. Find out how here.