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But You’re Too Expensive! I Can’t Refer You

15961-illustration-of-dollar-signs-pvDoes this story resonate with you?

A friend of mine does home improvements, including large jobs like kitchen and bathroom renovations. He had been getting a lot of referrals from his networking group, especially from the real estate agent. Then slowly the referrals dried up, even from the agent.

What happened? He’ll never know for sure, but he thinks it went something like this.

One of the chapter members asked for a quote for a project. Joe (my friend–not his real name) gave him a quote. The member’s reaction? “Joe, you’re pretty pricey.”

Soon after that, the referrals dried up. Joe assumed the chapter member spread the word that “Joe’s kind of expensive.”

Joe lost a lot of referrals, including a year’s worth from the real estate agent, who has now finally started referring him again. Why did she finally start again? Because the cheaper guy she started referring screwed up one too many times.

Is Joe “pricey?”

Good question, and the answer is “yes” and “no.” Joe’s prices are competitive for the quality of work he does, so no, he’s not “pricey.” But home improvements are expensive, and Joe has to deal with sticker shock all the time. Joe’s chapter member didn’t know what the job should cost, so he was surprised by the price and assumed it was high.

Any of you could find yourself in a similar situation, especially if you are in a business where many of your clients aren’t educated about how much you should cost.

What can you do?

First, accept that not everyone will refer you. Some people have a friend or fourth cousin six times removed who does what you do, for less. And other people are just cheap and won’t be educated that you are worth what you charge. Forget about them.

What about the rest? They need education. Don’t wait until someone gets a quote from you to address the price issue. Talk about it in your one on one meetings. Bring data to back up why you are competitive. Give some ranges of pricing and explain why that’s what your services cost.

But that’s your words. How about using someone else’s? Bring satisfied clients to your networking group and ask them to talk about your pricing. See if you can get a client to say something like, “Yeah, I thought Joe was expensive but then I shopped around, saw what cheaper would get me, and wow, Joe looked pretty reasonable after that.” Think that would be convincing?

Education is the key. You already know you need to educate your clients on why your prices are competitive. Don’t forget to do the same education with your network.

Anyone else have a similar story to share and how you overcame it?