Jul32025
ProfitabilitySalesSomeone will always do it cheaper

 

Selling against cheaper competitors

This is a copy of my article published in Building Today magazine, June 2025. Building Today is the official magazine of the Registered Master Builders Association in New Zealand.

 

Bumping up against cheaper quotes from competitors, especially in tighter economic times, is a fact of life. Hoping it won’t happen isn’t a good strategy to deal with the problem. What you need to do is take proactive steps to differentiate your business in the minds of the customer, because if you can’t express logical reasons why your offer is better, the customer only has one point of differentiation to guide them…..the price.

The key to doing that is making certain that the customer — not your service or company — is the core of all your sales messages and make sure that there are financial proof-points. Here’s what you do:

  • Step #1: Realize that price isn’t the main issue. Research reveals that even with fully commoditised products (where there’s no differentiation at all between competitive offerings), low price is the dominant factor in the buying decision only 15 percent of the time. This is especially so in the residential market. In the majority of cases, other factors (convenience, timing, location, brand familiarity, personality of the sales person, etc.) are either more important or just as important.
  • Step #2: Determine the value of your differentiators to the customer. Don’t accept your customers’ pretended opinion that price trumps everything. Instead, estimate the financial impact of your service differentiators on the customer. Thinking about financial impact forces you to consider the problem/solution from the customer’s perspective, rather than your own internal, technical perspective. Will a cheaper job cost more in maintenance in the long run, for example.
  • Step #3: Express those differences from the customer’s viewpoint. Stop talking about your service or your firm. Instead, craft a set of sales messages that use the second person (e.g. “YOU”) rather than the first person (e.g. “WE” or “I”) to tell a story that’s meaningful to the customer. For example, rather than saying something like: “We have a leading-edge, project management systems” say something like: “You will be able to access your own window into the project management system, so you can monitor your project’s progress in real time.”
  • Step #4: Estimate the cost of NOT doing business with you. There are plenty of horror stories out there about customers who went with the lowest quote, only to find the final cost exceeded what you had quoted/estimated and came with additional frustrations. You may have personal experience of this so make sure you include this point to a prospective customer during the education phase of the sales process.
  • Step #4: Retrain your sales team. Now that you’ve re-crafted your messages, retrain your sales team (if you have one) to sell your solution as it’s seen from the customer’s viewpoint. Make sure that the sales team can eloquently express the financial impact on the customer as a proof point that more than justifies the higher price. Important: Also do not discount your rates. Discounting undercuts the value of your uniqueness. If the customer wants a cheaper price then look to reduce the scope of the job or offer lower cost material selections.

 

It is likely you will be coming up against cheaper quotes in the near future as the amount of work available shrinks and more companies are bidding for it. A better sales process will help you stay at the top end of the pricing band and help protect your margins and cash flow.  Contact me at andy@tradescoach.co.nz or book a strategy session HERE for a review of your sales process and discussion on how it can be enhanced.