Say No First and See How it Goes
Several years ago, I was buying a new golf bag at a sporting goods store. I was excited to find a quality brand bag for less than I expected. The bag was sitting next to a price sign that said $180. I scooped it right up and headed for the register! When the woman at the register scanned the item’s tag, it came up for $250 instead. I jumped a bit in surprise because I thought it would be less, but obviously I had misunderstood the price sign which was meant for another product. Now I had a decision to make. Seeing the look of trouble on my face, the woman asked, “is everything ok?” I told her, “Yes. It’s just that I thought it was less expensive when I picked it up and now, I’m trying to decide if I’d still like to buy it at this price.” She looked both ways and said, “let me see what I can do.” A few moments later, she swiped a special card through the reader, which brought the price down to $190. I was extremely thankful for the savings, and we completed the transaction.
It wasn’t until I got to my car that I realized that she had given away the store’s profit without my asking for it. The look of concern on my face and the mere suggestion that the price was too high was all it took for her to spring into discounting form. While I was appreciative, knowing me, I would have bought it regardless of the higher price anyway. I have a very pronounced “you can’t take it with you” relationship with money and I tend to buy what I want. One could make the case that she was simply offering outstanding customer service, but in the context of money and business, I believe she felt the awkward pressure caused by money conversations and buckled. Who knows how many thousands of dollars of profit this kind person was giving away every year? Good for me, but not great for business.
In the construction industry, buyers are conditioned to ask for money off no matter what. Often insinuating lower prices received by competition, which may not be true, buyers seek to pressure sellers to drop their price in return for the sale. Owners do it to GCs, GCs do it to subs, and subs do it to suppliers. “You’re not low” is such an easy thing to say, and the rewards are tangible. Thousands, even millions of dollars of value in negotiations are secured by savvy construction buyers every day with this one tactic. Many of us are programmed to “see what we can do” to lower prices when met with the slightest hint of price resistance. Talking about money can be awkward for people, and so many have been brainwashed to think the only shot they have to win the business is to get low. Truth is, most buyers just need you to be competitive on price and, if you’re the best fit for the project, they can award you the work even if you’re a little more than the low bid.
My advice? Stop giving money away as a hair trigger response to discount requests or insinuations. Here’s the rule. Say no first and see how it goes! You’ll be amazed how frequently you still get the business while retaining your gross margin. If your team embraces this technique 100% of the time, I’ll bet you pick up at least 1% in GP over the next year. Strengthen your personal mindset about the prices you set. If you and your team deeply believe in the value you provide, you’ll find it easier to fight for your margin and keep it more often than not.
The Spark Notes:
People often buckle under the pressure of money conversations, unnecessarily giving away profits when faced with price resistance.
In the construction industry, buyers frequently push for discounts, but being competitive and confident in your value can win deals without always offering the lowest price.
My advice: resist the urge to lower prices immediately, believe in the value you provide, and you'll retain more profit while still securing business.
