Getting higher prices

I am wondering if anyone has ever used this tactic to get new customers. We all know that people want their lawn cut for the cheapest price they can get so when you price a job why not add an extra $5 or $10 dollars to the price you are wanting to get. So if it is a $40 dollar yard you tell them $50 if they say no then you have room to negotiate. I brought this up because it seems like a good way to land more accounts because people always like to think they got the best price. Even if you end up back at what you originally wanted you are still making what you need and not low balling. I have used this a few times and it worked well and I am thinking about using it on all bids I do this year.

What are your opinions on this tactic?

 

I don't like it. What is they say no right off the bat.....are you going to say "wait wait wait.....I can give you a better deal than that"? Or what if they say...."I will think it over and get back with you"? What are your responses going to be? Most people around here do not negotiate prices...neither do I. I might go up on the price for a cleanup (if I am super busy or I can see they are going to be a PITA), but it's not offered for a tatic as such.

 

Offer them good work at an honest price. They'll like that much better.

Quoting high and getting "worked" down implies you were'nt giving them a good deal to start with, and degrades their opinion of you.

 

i don't negotiate on prices. it shows that i'm a weak business person and they'll always try to badger down the price. if they don't like the price i simply say "thank you for your time, if you change your mind you have my number" and walk away.

 

I agree. I do not negotiate on price. I am not the cheapest guy here, nor do I want to be. I want customers that are quality minded. On the last big commercial job we were awarded we were the highest bidder by $20,000.00/year. They just renewed and signed a three year contract with an annual increase and fuel clause. Good is never cheap and cheap is never good.

 

People around here dont negotiate prices either. I see what you are suggesting with this tactic, but I feel that most people appeciate a straight shooter approach. I always say my price and most of the time they say yes or no. When someone says "well, I dont know. That seems a little high" I give them a business card and leave it at that. Usually they (or there husband) will call back and say yes. :blush:

 

<a href='http://www.smileycentral.com/?partner=ZSzeb008' target='_blank'><img src='http://smileys.smileycentral.com/cat/3/3_2_10.gif' border=0></a> I couldn't have said it better....

 

Actually, it's not all that bad of an idea. You're talking about giving bids at a 20% higher than you currently do. And some companies get away with that. I know a handful around my area who charge 20-30% more than the rest of us do - more than they need to. And they make good money doing it.

The thing is there are several things you need to have in place in order to ask that kind of extra $ and there are also certain disadvantages do doing it. So it's a calculated risk you need to understand.

First, let's discuss the things you need to have in place in order to get away with that high of a price. Most important, there should be a reason why the client would want to pay more for your service. Most of the time, in my area, that reason is name recognition. Usually, only the bigger companies get away with this. People know they're big companies and associate their success with a higher standard of quality - which is probably true. They didn't usually get big by having poor service. If you aren't as well known, then you're going to have to go the extra mile in trying to convince the client (who probably hasn't heard of you) why you're service is top notch and better than the rest. You'll want to have a presentation material than anyone else. You'll want to have extras that others don't include in their service. You can get that higher price, but there has to be a reason.

Second, you need to understant that your not going to land as many bids. The % of bids you land will likely decrease fairly significantly because of the higher price. Now I know you said you'd negotiate down but when you give a bid at $50 and the potential customer says, "Well. Ok. Thanks. I'll think about it and call you if we're interested", which is basically them telling you they are NOT interested in that price. Then what are you going to do? Say, "Oh, well. Um...I could actually do it for $40. Would that be better?" You can't do that. You'll look like a Schmuck and lose all credibility. Now it appears you were just trying to rip them off. So you have no choice but to wait to see if they try to haggle. And if they don't try to haggle with you, they'll probably just keep looking until they find the $40 guy.

Some will say yes right off the bat. Just not as many as you get now. Some will try to haggle. And that's okay too. You can negotiate down like you said and make it seem as if they're really getting a good deal. But a decent percentage of people are just going to say, "Ok. Thanks. We'll discusss it. Bye!" and never call you back. You gotta know that going into this.

So you can counter all this by increasing your advertising. Here's how that works;

* Advertise more

* Increase the amount of bids you give

* % of bids you land goes down (as discussed above)

* End up with more profitable accounts accross the board.

* More profitable accounts helps pay for the increase in advertising.

One last tid bit. After a while, people begin to realize that the service they're getting from these higher priced companies isn't ALL THAT much better than the service they'd get from a smaller, less expensive company. I've given plenty of bids at say, $125 per month and then the customer told me, "Wow! I have been paying $160 per month for the last 2 years!" And I just say, "Wow. That's way too much. You're getting ripped off. And look at those weeds! Listen, I guarantee you will do a better job then they have been doing and it's just $125 per month." They switch every time. So I expect these companies that charge these higher rates also have a higher turnover. Be prepared for that as well.

 

everybody negotiates prices! you might not do it out loud with the customer but rest assured its being negotiated in the mind before its put on paper!

 

I don't negotiate either. I set a price per cut and let them decide if it's the amount they are willing to pay. I will offer them a slight discount on a monthly plan if they sign up for hedge and shrub trimming. If the cut price is set at $30, I'll discount their monthly bill to $115 (4 cuts ) if they agree to a minimum of 2 hedge/shrub trims per year. I then charge $40 per hour for hedge trimming with a 4 hour minimum. This generates at least another $320 per year from the account for 8 hours of hedge work. Many times the hedge and shrub revenue will be 30-40% of the total revenue from the account since most require 3 or more trimmings per year.