Jump In The Line

It would appear that spring‘s finally here.  A little late and kinda weak, but at least all that freakin’ snow is gone.

There’s something about spring that lifts the spirits, especially when it’s been a long, cold, lonely winter, little darlin.’  To celebrate, I’ve been hunting through the iPod for a real springtime toe-tapper – the kind of tune that’ guaranteed to make you feel good.  I think I found a winner, and if you can sit through this song without actually getting up and dancing (making sure, of course, that no one’s looking), then, my friend, you better check your pulse!

That’s Harry Belafonte with “Jump In The Line” from 1961.  As you no doubt figured, the song was featured in the high-concept art film “Beetlejuice” featuring a young (and Minnesota-native) Winona Ryder.

Last entry we discussed the three skills every contractor needs to be successful.  Obviously, you need strong technical skills.  But you also must have business skills and sales skills.

No exceptions.  No “buts” or “what-ifs.”  And definitely no “it’s different around here’s.”   Of course you have to be able to do the work, but you must also be able to read, understand and act on the information provided by your balance sheet and your profit-and-loss statement. You have to be able to determine how much to charge based on your true cost of doing business and your desired profit margin.  There’s no such thing as the “going rate.”

And finally, you have to be able to present your offerings to prospective customers, explain solutions in terms that are meaningful to them, show what’s in it for them and get the job at your price.

In other words, sell!

Towards that end, I have a little quiz I’d like you to take.  All these questions are True/False.  Read each question carefully and think them through before answering.  It’s not a hard quiz, but your answers will tell you a lot about your attitudes toward that third vital skill.  You can, if you wish, print this quiz out (click here to get a copy) if you’d like to keep a copy.  Go get em!

True or False

  1. Businesses go broke due to lack of volume
  2. All things being equal, people buy on price
  3. Price is more important than service
  4. Quality is more important than service
  5. People only spend money on things they can see
  6. Price is more important than availability
  7. I’d rather compete with an idiot than a crook
  8. Price is rarely the deciding factor
  9. Some products are so good they literally sell themselves
  10. Quality is obvious. I mean, just look at it!
  11. Most people care only about price
  12. You can cut your price and make it up in volume
  13. Most customers enjoy the price negotiation process
  14. Customers like it when you cut the price a little at the end to seal the deal
  15. Most businesses go broke because their prices are too high
  16. The 5 most important buying considerations are, in order: Delivery, Professionalism, Service, Quality, Price
  17. I don’t need to advertise – word of mouth is good enough
  18. People always worry about paying too much
  19. People never worry about paying too little
  20. Most unhappy customers will let you know about it
  21. Customers hammer you on price because they can’t afford the price you’ve quoted
  22. Most sales people LOVE to talk about their price
  23. Your selling price should be based on cost, plus a desired profit
  24. If your gross margin is 20%, and you cut price 10%, you can make it up with a 25% increase in sales volume
  25. You can make more profit selling lower priced stuff since you can sell, you know, more of it.
  26. You’re willing to work a lot harder than you are now in order to earn the same amount of money
  27. Good salesmanship is an art
  28. You need the “gift of gab” to be a good at selling
  29. Price is the most important element in a bid situation
  30. Buyers usually toss out the highest and the lowest bids and work with what’s left
  31. You don’t have a chance to do any selling in a bid situation
  32. You can cut job costs by making some of your own materials rather than buying them ready made
  33. Price is always more important to the buyer than it is to the seller
  34. If I start getting every job I bid, it’s a sign that I’m turning into one crackerjack salesman.  Crackerjack!
  35. When I lose a job, it’s usually because my price is too high.

Well, how did it go?  Did any of the questions get you thinking a little bit?  As we said earlier, how you answered these questions may indicate your attitudes about selling, and may reveal some misconceptions you may have about buyers and sellers.

We’ll be going over this little exercise in detail in our next blog post.

And make sure you enjoy the spring.  After this past winter, we’ve earned it.  And remember, spring leads to summer, and summer is the time for all good Parrotheads to rejoice and be glad.  Here’s J. William Buffet’s homage to a Belafonte classic:

On my way, Harry!


2 Responses to “Jump In The Line”

  1. John:
    GREAT quiz! My favorite is #12 (you can cut your price and make it up on volume) because I see it so much with contractors selling to builders.
    Here’s the math. . .
    Let’s say you average 35% gross margin in your business and you’re contemplating a 5% price decrease. Your top line sales have to increase 11% to generate the same profit dollars. And if you’re only running a 25% margin business, that 5% price decrease demands a whopping 19% top line increase!
    The numbers can quickly spiral out of control. . . have a 25% margin business and want to cut prices by 10%? Better find 50% more sales!!!
    Sell on value not on price. Trust your customers to be smart enough to know that the lowest price is seldom, if ever, the lowest cost.

  2. Thanks for the feedback Tim. Hope all’s well with you!

    I carry a little laminated card around with me that has all the numbers for required increase %’s with a price cut as well as how much business could be lost with a price increase without losing profit dollars – which is even more amazing. If a contracting firm is working on tight gross margins, say around 10%, and they increased their prices by 10%, they could lose 50% of their volume — HALF THEIR BUSINESS!!!! – and still be at the same place in terms of profit dollars.

    Now it’s doubtful many – if any – of their customers would even notice a 10% price increase – so that money would more than likely go to bottom line profit. Which is a good thing.

    In the end, numbers don’t lie!

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