In an effort to attract new customers, home improvement contractors like to run ads with big “discounts”. We have all seen the 25%-50% off ads in our newspapers and in our mail. When the sales person comes to our house there is another 10% off sale if we act today. Some even call their boss to get a few more 10% off discounts. If we add up all the discounts the products must be free!
Heavy discount marketing requires greed on the part of the consumer in order to work. If a consumer wants to pay a fair price for a fair product or service this tactic will not work. Who in their right mind actually believes that someone is offering them vinyl replacement windows or siding for 50% off? If any company discounted their service 50% they would go out of business in a few weeks. Who would want to buy from a company that is going out of business? If the company was going out of business, would they sell more products for a loss to go out of business even quicker?
I think we can agree that the 50% discount is really fishy, let’s see how it works. Let’s say they want to sell their service for $900 a unit. In order to run a 50% off sale their “regular price” needs to be $1800 per unit. If they want to offer a few 10% off deals while they are selling their product in the customer’s home their “regular price” needs to be real high.
Let us use a regular price number of $2500 for a replacement window. They can run an ad for 50% this month only, they don’t want you to wait until next month. Their asking price is now $1250 for each window, when they you this price you will reply that it is to high. Now comes the first “price drop”, a 10 % savings if you act now. Your new price is $1125 for each window. If you balk at this price generally you will get another 10% if you let them place a job sign in front of your home for a few months. You new super low price is around $1000. If you balk at this price thy will call their boss to offer you an even lower price if you agree to sign the deal today, let’s say another 10% off. So far the price went from $2500 all the way down to $900.
It seems like there is no end to the price drops. Some companies will call back a week or two after the appointment to offer a few more price drops. Most consumers hate this tactic because they are afraid to buy before the lowest price. Imagine buying 20 windows for $1250 each ($25,000) and finding out that your neighbor bought the same windows for $800 each ($16,000)? You just overpaid $9000 , would you be angry?
In an effort to combat this time of pricing tactic I promote a “regular everyday price” and 10% off when needed to drive sales. No fabricated sales, no inflated prices, no price drop until they buy tactics, just an honest price for a good product. This type of sales policy does not leave any room for the salespeople to overcharge some people while discounting other people. Hopefully all the consumers who are tired of the pricing games will demand this pricing method from their home improvement contractors. Let’s keep the used car buying experience on the car lots and not in our homes.
