I think this is where we all need to sell quality, which you did in that statement about his home. I think you, DVS clued us into this topic early we have to get out of the price game and into the satisfaction game.
We all need to work hard to tell the customer why our prices are higher:
1. We do high quality work and will do the extras-not create deficits as many contractors do.
2. We work hard to educate you on the process and show you whats behind every door, that takes knowledge, time, and costs dollars.
3. I want to be around in 10-15 years to continue to offer great service.
4. I want to pay good men, good wages, and be a responsible citizen and proud of the business I own. That takes dollars.
What are the others I am missing?
Use his numbers game against him get him thinking not why yours is so high but why the other contractors is so low? Maybe he will leave out the fabric when your not looking, use poorly graded aggregate etc.