HVACRDB

Building Relationships Where Everybody Wins Part 4

Previously, we discussed partnering with your dealers and bringing products to them such as flat-rate pricing for service and service agreements. Both will enhance your dealers' professionalism and their ability to improve their service revenue. We also talked about educating your territory managers (TMs) to become business consultants charged with the task of improving your dealers' bottom lines.

Another key ingredient to your dealers' success is a pricing guide dedicated to equipment replacement. Now, we know we're speaking your language when we talk about selling equipment, and we assume this concept will pique your interest and that of your TMs.

“Good-Better-Best!”

Through the years, we've described equipment replacement pricing selected from a book as “cookbook” pricing or “good-better-best” pricing. We like to refer to it as “good-better-best” because it sounds more professional, and we believe, when presenting equipment, pricing in this format offers retail customers choices to meet their budget and lifestyle. In addition, since everyone understands “good-better-best,” it seems logical to stick with that terminology.

“Good-better-best” pricing is nothing new. Most products-related businesses market and offer different models and different brands to satisfy customers' wants or needs. The HVACR industry certainly is no different. However, most contractors pull out their “creatures-of-habit” hat and place it on their heads when they offer a comfort system to a customer. We have found that contractors or their salespeople continue to sell the same brands and models, sometimes forcing those brands and models to fit every application.

As a distributor, we know you're happy when your customers continually recommend your brand of equipment. Certainly brand loyalty is what you strive for in business. However, improved product mix or selling an ever-increasing number of high-efficiency models is also of great importance. Unfortunately, some contractors never give a customer the choice of an upgrade when proposing a comfort system. The result is your dealers may never achieve their full financial potential because of their predetermined or “locked-up-and-locked-out” mentality when it comes to equipment offerings. At the same time, your high-efficiency systems in inventory tend to “hang around” a bit longer than they should.

Equipment Sales Through “Good-Better-Best” Pricing

Here's the important point. A well-designed “good-better-best” pricing guide always places equipment choices before the customer. It takes away the bad habit of only offering one piece of equipment when there is more than one choice that will do the job. It allows the retail customer the opportunity to choose what will best satisfy his or her needs for comfort, health and efficiency. It provides three price quotes to the consumer from your contractor customer and may satisfy the consumers' desire to shop for other price quotes from other contractors offering other brands of equipment. It also allows for pricing add-on components to the total system price, making those components a part of the system rather than an afterthought.

“Good-Better-Best” Expands a Contractor's Sales Force

Besides the obvious benefit of providing comfort options to their customers, contractors using a “good-better-best” pricing guide can convert technicians and others within their company into sales staff. By doing so, it removes some of the burden from the owner/contractor who typically doubles as operations manager and outside salesperson. His sales staff can grow exponentially if service technicians have the ability to offer replacement equipment quotes on the job when they find defective equipment. Growing the sales force can lead to more equipment sales at higher margins when customers accept the contractor's price on the spot. Selling in this way keeps your customer away from bidding wars with the competition just to retain their customers and keeps your equipment line at a higher value in your market.

Good-Better-Best Improves High Efficiency Sales and ROI

In addition, contractors using a “good-better-best” pricing guide generally sell more high efficiency equipment and more ancillary products with each system than those that don't give the customer a choice. The result is a higher selling price for each system sold and a higher profit margin for the contractor. It's also good for energy savings.

Perhaps most important is that the pricing established in the good-better-best system for each contractor is based on all costs associated with the installation and the contractor's desired net profit. Hence, adhering to the pricing guide will guarantee the needed return on investment to the contractor, proving his installation crews work efficiently.

Offering a Good-Better-Best Pricing System

So how can you offer a “good-better-best” pricing system? Systems are available whereby you can preload the brands and models that your company sells. Your customers then determine the labor rates, equipment and materials mark ups and desired net profit to be entered into the system to determine their customized equipment installation prices.

Once again, your territory managers will play a key role in explaining the benefits of a good-better-best pricing guide to your customers. They will serve as the catalyst to move the program forward within each contracting company.

Your territory manager can also coach your customers on making a professional presentation at the consumer's home so that each salesperson will have a greater opportunity for success in using the good-better-best presentation method.

With all the emphasis today on professionalism within the contracting industry, a good-better-best equipment pricing system for your dealers makes a lot of sense. When coupled with flat rate pricing for service and service agreements, your customers will stay ahead of the competition.

Most importantly is that you will build the kind of loyalty that you seek from your customers because they can rely on you to bring systems that truly help their bottom line.

“Good-Better-Best” Improves High-Efficiency Sales and ROI

In addition, contractors using a “good-better-best” pricing guide generally sell more high-efficiency equipment and more ancillary products with each system than those that don't give the customer a choice. The result is a higher selling price for each system sold and a higher profit margin for the contractor. It's also good for energy savings.

Perhaps most important is that the pricing established in the “good-better-best” system for each contractor is based on all costs associated with the installation and the contractor's desired net profit. Hence, adhering to the pricing guide will guarantee the needed return on investment to the contractor, proving his installation crews work efficiently.

Offering a “Good-Better-Best” Pricing System

So how can you offer a “good-better-best” pricing system? Systems are available where you can preload the brands and models that your company sells. Your customers then determine the labor rates, equipment and materials markups, and desired net profit to be entered into the system to determine their customized equipment installation prices.

Once again, your territory managers will play a key role in explaining the benefits of a “good-better-best” pricing guide to your customers. They will serve as the catalyst to move the program forward within each contracting company.

Your territory manager can also coach your customers on making a professional presentation at the consumer's home so that each salesperson will have a greater opportunity for success in using the “good-better-best” presentation method.

With all the emphasis today on professionalism within the contracting industry, a “good-better-best” equipment pricing system for your dealers makes a lot of sense. When coupled with flat-rate pricing for service and service agreements, your customers will stay ahead of the competition.

Most importantly is that you will build the kind of loyalty that you seek from your customers because they can rely on you to bring systems that truly help their bottom line.

Jim D'Amico and Ken Cederquist are partners in Profit Strategies, a provider of retail pricing systems for service and installation for the HVACR and plumbing trades. Jim is a former HVACR contractor and is available at [email protected] or 800/353-4393. Ken is a former distributor and is available at [email protected] or 800/808-4586. Their main office line is 888/229-4100. www.ProfitStrategies.net.

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