Episode 415 – Competing with Low Ball Bidders
One of the questions that Mike frequently gets is how to Compete with Low Ball Bidders. A lot of people think that the only way to compete with this type of competition is to stoop to their level, but in reality, there are much better options other than slashing your profits.
When you get in a conflict with your competition fighting for the lowest prices, it really is a spiral to the bottom. There are a lot of unintended consequences that tend to happen that are not just bad for you, but for your customer as well when you find yourself in this position. If you aren’t pricing your services correctly, then you won’t have the budget to properly help your customers. If you focus on using the money to give your customers a great experience, and have a welcoming environment and shared core values with your clients, they tend to understand the higher price point.
For instance, one of Mike’s core values is ‘Make Money’. When he was running his companies, if a customer didn’t agree with his price point, he could point to his core values, and explain that he wants to give his clients a great experience and treat his employees well, and to do that he has to make certain margins. Many people think that the idea of money coincides with greed, however, that isn’t always the case. Mike has found that if you’re open with your customer, they will respond positively to honesty. Everybody understands that there is an overhead associated with operating a business, and as long as you’re not price gouging, most reasonable people will understand and respect that you have margins to meet.
Resource Alert:
https://growmycleaning.wpengine.com/are-cheaper-prices-cheating-your-cleaning-companies-customers/
A big misconception that a lot of people have is that all customers care about is the lowest price point. The reality of the situation is that there are people that you just haven’t educated enough on what their pain is, so they default to just wanting the lowest price. This doesn’t mean just saying that you clean the best. What this means is picking a niche, finding what really bothers them, and then getting them to understand how you will fix it.
If someone says that all they want is the lowest price, the best next step is to start asking them questions. Once you start asking them if they’re okay with things like not having workers compensation or liability insurance, or legal employees, etc. they start to realize that there are things that are more important to them than just price.
There are three specific reasons why charging super low prices can be detrimental to you as well as your customers. The three things that you should always make sure you have enough capital for is 1) Hiring good people and treat them fairly 2) Have enough job to do the job that you’re advertising 3) Make a profit.
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