Cost is not value

Cost is the output for the project. How much you paid for materials, what the subcontractor billed, how many man-hours went into production, how much time the owner spent on their project.

Cost can also refer to your overhead. Your business insurance, your equipment purchases and your receptionist are all expenses. Your projects may not directly impact expenses, but they’re still important parts of a properly functioning business.

Often when customers have objections about price, contractors bring up their costs. They’ll talk about how much they spent on material, how the project took longer than expected, or how they have to put food on the table and pay the rent.

Here’s the rub: the customer is never upset about how much you spend to get the project done. They’re just upset about how much they need to pay.

Remember, your customer wants to spend this money. You’re not selling pacemakers or insulin. So when a customer objects to your price, there are two possible reasons.

Some customers want what you can deliver, but don’t value it very highly. You might win these customers with discounts, but they won’t ever buy full price because you deliver more than they’re willing to pay for.

Some customers want something but they don’t think you have it. These customers object to your price because you don’t understand what they value. These customers would likely pay more if they were getting what they want.

Pick a customer and adjust your costs accordingly.

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