How to Negotiate with Your Customers

“I love your $60k estimate and design, I want to do it, but I only have $55k.”

“Your competition was 20% less than your estimate.”

Do those objections sound familiar?

How do you negotiate with your customer when you encounter these objections?

Do you cave and try to pander to your customer to win the deal?

Do you awkwardly stand there, not sure what to say next?

Let’s dig into these and figure out how to make these a win/win for both of you.

I love your estimate, but I only have $——

You know how it is…

You worked hard through the consultation with your customer, to get a beautiful proposal together for exactly what they asked for.

When you present it for $60k, they tell you they love it and want to do it, but they only have $55k.

What do you do?

Payroll is due next week.

You have an outstanding bill at your supplier.

You need the work to fill the schedule.

You feel intense pressure to just wave off the $5k difference and say “Yeah sure, we’ll do it.”

And you collect that deposit check.

But…

You just kicked the can down the road.

The day of reckoning will come, and deep down you know it.

But what else to do?

You would have lost that job otherwise! No?

At least you have work now, right?

There are a few ways my brain wants to tackle this problem, there are often a lot of underlying contributors to this situation playing out like this. (like not knowing your numbers and breakeven on every estimate you create)

But for the sake of brevity, I’m going to try and focus on just one idea here.

When your client comes back to you with the objection of “I love it, but I only have $——”, then resist the temptation to negotiate on the price.

Rather, negotiate on the scope of work.

Here’s the thing, your client likely doesn’t know what they could change about the scope of work or design to most effectively move the price to the point they need it to be at.

That’s where you position yourself as the subject matter expert.

“Sure, we can adjust the job scope of work to get it to $55k rather than $60k, we could cut X or scale back Y, and save that $5k. Do any of those options sound good to you?”

And you’ll usually get one of two responses.

1. “I love that idea, yes let’s scale back Y, thank you for the suggestion!”
2. “Ah, never mind, I don’t like the idea of cutting back the scope, let’s just do it at the original scope for $60k”

In the first response, you didn’t negotiate like a used car salesman.

You positioned yourself as the subject matter expert and leaned in to understand your customer’s vision and goal, and made suggestions to achieve that.

You served your customer like you would your grandmother.

Seeking not to take advantage, but to listen and serve.

In the second response, you discovered that the customer was just calling your bluff to see what you would do.

Too many contractors don’t know their breakeven, and will cave to that bluff, not knowing that they’re essentially agreeing to do the job for free. (The pain will come later; you never get to avoid the pain.)

But not you, you knew your breakeven and stood up to their bluff.

Because you know your breakeven, your tone and posture is like:

“The price is what it is.

Don’t like it?

We’ll need to change the scope of work.

Or maybe you can’t afford what you want, and if that’s the case, I’ll work to gently and courteously educate you as to what things cost so you can make a decision.

If you can’t afford what you want, that is not my problem as the contractor, and I’ll just try to not waste your time.”

But you never cave and just give your profit away.

If you do, it’s not just you that suffers, but also your team and family around you.

Your competition was 20% less than your estimate.

This one will inevitably happen.

But you already know that competing on price is a race to going out of business.

Compete on other things, such as providing service and value that your competition is not willing to do.

If price was the only thing that earned a sale, then Lamborghini would never sell a car.

My favorite response to this objection is:

“Interesting… I’m curious, why haven’t you hired them yet?”

And then shut up.

And listen.

There’s usually a reason.

And when you learn what that reason is… it’s easy to highlight that there is more to consider than just the price.

If it were the price only, you wouldn’t even be having the conversation right now.

Work with them to coach them through making the best decision for their goals.

Overview

I did a webinar on the 4 ways to close more jobs that highlights the plain, simple, but effective things to cut to the chase and close more work, drawing from what we learned over the years at Tussey Landscaping.

Give it a watch and save the years of real world learning we had to endure.

Or, if that pesky “knowing your breakeven” problem is the one gnawing at your confidence, book a call with one of our SynkedUP experts, and we’ll show you how we can systematically help you solve that problem in your business.

Go get em. 💪

Weston Zimmerman

SynkedUP CEO and founder