Managing Price Complaints, Part 1

We’re heading into the busy season where contractors make snap decisions on repairs because they’re hot and will do anything to get cool. After consumers cool off, they have time to stew about the work performed. That’s when things can heat up for you in the form of a price complaint. There is a right way and a wrong way to deal with price complaints and your instincts are probably wrong. Here’s how to handle it well.

Price complaints are inevitable. No matter how low you price your services, someone will complain. I bet even the dollar store gets complaints… complaints from nickel shoppers.

Price complaints typically arrive after service is performed. When people complain about price beforehand, we call it an objection. If the price objective is overcome, they buy from you. If not, they buy from someone else.

The homeowner does not object to the price beforehand. The homeowner complains about the repair after the fact. The homeowner authorizes your technician to proceed with the job. He talks with a friend or neighbor (or even a competitor) who does not have all the facts. The homeowner is instructed that he paid too much.

A Losing Situation

You cannot win a price dispute with a homeowner. Even if you prevail, you lose.

Price disputes cost management time and aggravation. They are negative energy. Arguing over price takes your eye off the ball. You are not focused on building your business, but a petty dispute.

If the homeowner stops payment on a check or disputes a charge with the credit card company, it will cost you more than it’s worth to try and collect. And the homeowner may up the stakes, seeking help from the state Attorney General’s office. In the homeowner’s mind, you are harassing him.

If it’s too late to stop payment, the homeowner will complain to anyone and everyone he knows about your company. This negative word-of-mouth marketing can kill your company if it gets out of hand. And today, the Internet is empowering people to not only tell their circle of friends about you, but to tell thousands, even tens of thousands about your unfair treatment.

How? The Internet. So many consumers have created websites dedicated to getting even with companies they’re angry with that the terms, slamsite and gripesite have been created. The angry consumer tells his side, from his view. A consumer can say just about anything he wants and there is little you can do to prevent it. The courts have backed freedom of speech whenever one of the sites has been tested.

To Win, Surrender

When a customer stops payment, you feel cheated. When a customer demands money back because Bubba said he would charge less, many company owners feel cheated. The owner gets his back up. He fights.

Worse, some do stupid things. A normally mild mannered, even-tempered friend of mine showed up for a meeting on crutches. I asked what happened. He mumbled something. Sensing something, I pushed him and would not let it alone until he fessed up. He got so mad at a customer who was stiffing him that he went to the customer’s house and started banging on the door. When the homeowner refused to answer, he started kicking the door and broke his foot.

Do not kick your customer’s door. Do not attempt to sabotage equipment. Do not threaten to report the amount of the dispute as un-earned income to the IRS. Do not do something stupid.

Instead, surrender. Give up. It’s hard, very hard to do. It runs counter to your every instinct. Yet, it will reduce your blood pressure. It will save time. It will save future grief.

Explanations

I wrote a letter for the Service Roundtable to address these situations in a positive manner. The letter attempts to explain the reason why some contractors charge more than others, without offering an apology. In the letter, an analogy to steakhouses is made. There is a difference between Ruth’s Chris and Bonanza, yet consumers who sit down in Ruth’s Chris, order off the menu and enjoy their steak, do not later complain because they learn Bonanza offers the same size steak for less.

The letter concludes by giving a consumer an out. Since the consumer has new information and should now understand better, he is asked to pay whatever he thinks is fair. However, there is a postscript. The postscript subtly implies that the only reason a homeowner would not pay in full is because they could not afford the bill. The letter shames them into paying in a nice, inoffensive manner.

Some may not pay after reading a letter like this, but most will. Some may not pay everything they owe, but you will collect more with less effort using this letter than by arguing with the homeowners. Plus, you will not generate bad will.


This was excerpted from Matt Michel’s book, The Power of Positive Pricing, available for $28.95 from the Service Roundtable online store (Roundtable Rewards members receive a $5 rebate on the purchase of this book). In the next CB Hotmail, Matt will conclude with Part 2. He shares a contractor’s one-time price adjustment, how to set correct expectations, and how to cover the cost of complaints.

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