Many businesses should be asking their clients if it is Cost, they are concerned about or is it in fact the Price during the closing phase of their selling process. Now some of you might be thinking but hang on what is the difference between the two? Juvan, they sound the same? What if I told you that we have all experienced the difference of Price and Cost at some point in our lives even if we do not realise it.
Melanie and I for example experienced this first-hand during a renovation project years ago. We decided to renovate our bathroom and the first builder who quoted us told us that the renovation PRICE would be $20,000 including the bathroom fittings.
The second builders’ quote was $30,000. We can see that the second builders’ PRICE was considerably higher than the first builders’ PRICE of $20,000. We decided to go with the first builder as the PRICE was lower.
About three weeks after, the basin pipes were leaking so we had to call a plumber to change them at a PRICE of $1500 including his labor. This increased the price to $21,500. Three months after the job was completed the taps and shower head needed replacement which amounted to $800. This increased the investment and PRICE of our new bathroom to $22,300.
Six months after the job was completed the wall started to have damp marks and the builder told us that the tiling had to be removed so that they could access the leak and break the wall to fix the piping and close it up. Thereafter they had to re-tile and this would cost us an additional $5800.
On top of that the tiles used before had been discontinued which meant that we had to also purchase new tiles. We were fed up with the first builder and decided to rather get hold of the second builder as things were clearly not getting better.
We decided to use the second builder who PRICED the entire job initially at $30,000. We decided to go with a more modern look and redid the entire bathroom with the second builder. We have had this bathroom now for the last 7 years and the only additional investment literally has been a bottle of silicone.
Now let us look at what I have just said, the Price of the second builder was considerably more than the first builder. The COST of the first builders job for 6 months was $ 28,100 or $ 4,683 per month. In the last 8 years the COST of the bathroom done by the second builder has been $30,000/8 years = $ 4,000 per year.
Not only is everything still functioning, but there was also no further inconvenience or disruption, and this house has become an investment property.
So, let me ask you this, was it PRICE that we should have been concerned about or should we have rather focused on COST?
The reason I have explained this story to you and have asked you think about this again, is because a lot of people (including Melanie and I) have gone with the first Builder in various situations as he had beaten the second Builder on Price.
Very few people would have realised that almost nobody could beat the second Builder on Cost as his work had greater value. Since then, we have learnt a valuable business lesson, that Price is a one-time thing, and that Cost is a lifetime thing.
Let us be reminded to always keep in mind that cheap things are seldom good and good things are seldom cheap.
So, do you agree we should all strive to obtain the best lowest possible cost for our clients?
1) I suggest using an example from your own life or industry that will resonate with your clients.
2) I would urge you to break the price down for the potential client, writing it while you explain. It is a well-known fact that we believe what we see and are persuaded by emotion with what we hear, leading to a much better chance of making the sale.
3) Breaking the difference in numbers to explain the Price vs Cost concept.
4) To let your client, know what valuable business lesson you learnt (that PRICE is a one-time thing, and that Cost is a lifetime thing.)
5) Close the sale telling them that this is the lowest possible COST for them (Note the use of COST).
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