Sell price or sell service

by Allan Heydorn
Created: January 21, 2008

It?s hard for sweepers to do both, here?s why ... plus, what you need to know if priced-based selling is what your market demands.

"If it's a job I want or a customer I do several properties for I'll work with them a little," says Debbie Jacketta. But rather than cut price she'll suggest only sweeping the back of the lot once a...
"If it's a job I want or a customer I do several properties for I'll work with them a little," says Debbie Jacketta. But rather than cut price she'll suggest only sweeping the back of the lot once a week, cutting one day out of the sweeping schedule, or suggest other dumping options. Other contractors suggest eliminating certain services - sidewalk sweeping, emptying trash containers, or blowing corners - without reducing price to help sweepers keep the customer without resorting to price cuts.
Uri Ben-Yashar says the only time price should be a factor is if you're bidding against a qualified contractor and all the other parameters on that job are comparable. "If the services you both...
Uri Ben-Yashar says the only time price should be a factor is if you're bidding against a qualified contractor and all the other parameters on that job are comparable. "If the services you both offer and the equipment you both have is comparable, then price might be the only real area of differentiation. If price is the only differentiation then you have to adjust based on price. But that would be only if you know who you're competing with, and that doesn't happen very often in our business," he...
Carl Barton says he might consider more aggressive pricing for what he terms a "strategic" sale, for example where a property manager has eight accounts for bid. "If seven of the properties are...
Carl Barton says he might consider more aggressive pricing for what he terms a "strategic" sale, for example where a property manager has eight accounts for bid. "If seven of the properties are attractive to us and one, maybe, it's outside our normal service area and is not attractive to us, I might go ahead and accept that single property at market price in order to get the other seven jobs," he says.

He says he?s had more than one customer call him and tell him a contractor had said he would sweep their parking lot for $12 when Barton knew it should be more like $30. ?So in many cases I?ll walk the customer through our costs, and share some of our costs with them, and I?ll point out that our costs are similar to what all sweepers? costs are.

?So I asked the customer, ?If our costs are $65 an hour, let?s say, and it should be a half-hour sweep, what is it that you?re not getting from the contractor charging only $12 for the job? What isn?t he doing that we?re doing? Or how long is he really on that lot for $12?? I ask the customer, ?What aren?t you getting???

Competing with price

Educating and staying in constant communication with the customer is one way to compete against low-priced contractors.

?We work hard informing our customers what they should be getting from their sweeping contractor and we work hard giving it to them,? Barton says. ?We talk about insurance, legal dumping, and all the things every contract sweeper should be doing for them, and we educate them that all those things are included in our pricing structure.

?To me sweeping is a financial decision as far as protecting the assets of a property,? Barton says. ?We save them money and keep the property looking good, and saving them money is not necessarily doing the sweeping for less money.?

Other factors contractors use to convince property managers not to buy on price include:

Use of global positioning systems (GPS)

E-mailing digital photos of parking lot

Reliability

Equipment

Back-up equipment

Length of time in business

Company structure and size

Experienced drivers

References

Variety of services

More than one of the contractors said they stay in constant contact with each customer. ?We?re their eyes and ears out there and that can be very important,? Ben-Yashar says.

?We check our jobs, we use GPS, we talk about our length of time in the business, a while host of things. Plus, our work is guaranteed. If they?re not happy we?ll make it right, it?s as simple as that,? Jacketta says.

But no matter how hard they try, if price is the issue the other factors don?t have much impact.

?It doesn?t work a lot, maybe 25% of the time,? she says. ?The only way it will work is if they?re unhappy with the last contractor who swept for them and they?re willing to pay a little more to be happy, but even then they?re usually only willing to pay a little more. They?re not willing to go up a lot,? Jacketta says.

Vitale has come to the same conclusion. ?If the numbers are really far apart it?s not going to make a difference, but if they?re close we can usually squeeze the few extra dollars out of them,? Vitale says.

And for long-standing clients or even some large clients there are other ways to work with them to try to meet their price without giving in on your own price structure.

?Relationships, relationships, relationships. They?re so important, and it often comes down to that,? Vitale says. ?We provide good old-fashioned service, we work to meet their needs, and we respond immediately to any concerns a customer might have. In the end it all comes down to establishing trust, because if you can do that then in many cases price becomes less of a factor.?