The Big Drop Is A Big Flop

Let me preface this post by saying that this is not an assault on those within the home improvement industry who use a price drop as an incentive to close a deal.  The issue is the “big drop”.

Historically this practice dates back to the late 40’s and early 50’s when in an effort to sell roofing, siding and storm windows, sellers would offer a discount, maybe 10% of the quoted retail price to get the order.  In those days the average roof sold for $350 to $500 and siding ranged from $1200 to $2000. Accordingly, the discounts used were believable and represented a reasonable incentive. A siding job quoted at $1600 representing a $160 (10%) discount was equal to more than an individual was paid for a week.

By today’s standards, the $35,000 sunroom or basement, the $15,000 siding job or $10,000 window replacement (where there are multiple discounts ranging from $3,000 to $8,000 and more) start to resemble the way automobiles are sold – – with little or no credibility to the quoted price. If you are a proponent of this selling style, you need only review the manner in which you get rescission. The majority of respondents cite price as the reason.  If the customer believes your net price is too high, they certainly didn’t believe the list price was reliable.  Consider the number of people you don’t close because the abundant discounts don’t seem credible.

When the list price is validated and the customer sees value in the product versus the price, the incentive offered has reliability.  Often salespeople rely on that “big drop” to get the sale, because value was not sold. If you offer a bonus or discount as an incentive in your advertising, this price reduction is dealt with soon after you quote the list price.  The net sales price is then validated by your prospect.  Then the “buy tonight discount”, which can be anywhere from 3% to 5%, will make sense.

This is a call for home improvement companies to review the manner in which their in home presentations are made and how the value of their product is being established.  Once this happens, “big drop” is replaced with an initial presentation incentive, which will increase your closes and diminish your rescissions.

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