If you are a building materials manufacturer, you should consider raising your prices. I recently consulted with two different building materials companies and part of my recommendations were that they raise their prices.
These particular companies, make a demonstrably better product. They have better materials, better design and better engineering. If you put their product next to their competitors, the differences are very obvious.
Both of these companies were focused on the sales they lose to lower priced competitors. Their focus was on, how much more they cost more than why they are a better solution for the customer. When I researched their situations, I found out a few things that were holding them back.
They had the mental attitude that they were at a disadvantage because they cost more.
The customers reads this as, “You are the same as the lower priced competitors, you just cost more, so why should I spend more?”
Even while they were losing a lot of sales to the lower priced competitors, the customers who wanted them, really wanted them. The higher price wasn’t a problem, as the customer wanted the better product and was willing to pay more. I told these companies that they could raise their prices because the people who want their product, really want it.
If you want a Rolex watch, are you going to switch to another brand of watch, that costs a little less? If the Rolex price increased cost 5% more would you be more likely to buy the cheaper watch?
If you have a better product, you need to rethink your sales approach.
You should be a little aloof. You need not be afraid to say, “Maybe our product isn’t right for you. We are not right for every customer. If the lowest price is driving your decision over performance, then we are probably not right for you.”
The other approach is to explain to the customer, that they need to look beyond the product cost in order to evaluate the true cost. These additional considerations can include installation costs, potential callbacks, warranties, performance, appearance and more. When you believe in your higher priced product, you will also lose fewer sales to lower priced competitors.
In either case, the attitude to have is, “Yes we cost more. Would you like to know why?”
The other reason to want to raise your prices is to have more profits as a goal. Every building materials customer can tell me their three top suppliers. These are companies the customer couldn’t imagine doing business without, even if a competitor offered them a lower price.
Being one of these companies allows you to charge more than your competitors. Even a small amount more, adds up quickly to give you an even more competitive advantage.
Most building materials companies are not one of the top three suppliers of their customers. They are usually as good as the other guy. When you have a goal of higher prices, you can get there by having “hands down” the best customer service. The best sales people, the best customer service, order processing, technical support and any other way that you interact with the customer.
When you make this a goal, the whole company has to live up to this. Can you imagine staying at The Four Seasons Hotel and finding a rude housecleaner? It’s not going to happen. How can you bring your entire company together to provide this level of support?
There are two ways to raise your prices.
- Have a Better Product and Believe in it.
- Give your customers a much better experience in dealing with you than your competitors.
Both of these opportunities are sitting right in front of you if you’ll just act on them.
Contact me if you’d like to raise your prices.