Lowest Price Marketing
by NACHI member Bob Kille
*There are several factors to be considered when thinking about trying to create sales with a low price marketing strategy, or just lowering the price this one time to close the sale. For the most part these factors remain true whether your just starting out or not. *
Some of the counter points I make in this article, like raising prices, may even seem to be counter intuitive, but experience has born out the positive results and kept the gas gauge full.
First of all, I’m going to presume that you have done the math (profit calculator) and determined where your pricing needs to be in order to be profitable at the level you need to maintain your household, marketing, continuing education, insurance, pension plan, etc… and make this risky undertaking worth while.
Since the number of inspections you’ll be doing in your first year or two will generally be below the numbers that can support all of the above, closing the sale and getting the most for an inspection is paramount. So is a little cash in the bank.
The premise that any sale is better than no sale in the beginning is just plain wrong. Selling yourself short in the beginning of your home inspection career comes with a lot of baggage, which can be hard to overcome.
· Lowered perceived value
· Spur of the moment pricing model
· No loyalty at the low end
· Limited referral activity
· Wasted marketing
· Liability is higher
· Takes longer to become successful
Secondly, there is no evidence that simply lowering your price will close the sale on the phone at a higher rate than a good, well-executed sales script. To the contrary, well-executed sales scripts and techniques have closing rates in the 80 - 90% range.
*It should be noted that 100% is not possible, even if you lowered your pricing at every opportunity to close the sale. I’ll bet that if you lowered your rate to $59.95 you would have less than a 50% closing rate. Most people are distrustful of a low price and accepting of a moderate or high price. *
If you want a quick way of knowing about where your pricing should be, look to the pricing rates of any of the home inspection franchise companies in your area. Knowing that 8 – 12% of the gross goes back to the franchise, you should be able to have a price structure just under theirs and still be perceived as in the same league.
You have to wonder whether or not, if you even want, a price shopper for a client. Price shopping is more prevalent at the lower end housing market where the liability is higher and penny-pinching clients try to see what they can get away with when something goes wrong with their new home.
Add to this, just one more fact, price shoppers have no loyalty and as such, all continuing marketing dollars spent on them is wasted. Unless of course, you choose to be the lowest priced home inspector forever.
I could write an entire article on precieved value but, suffice it to say, that your pricing will effect how you are viewed by the realtors and their referral activity towards your company. That’s why I suggest charging close to what the major players are charging.
Most realtors, just like most people, would rather do business with companies that have prices in the mid to high side of the marketplace. Pricing tends to reflect value and most realtors will only refer to companies that are at least perceived to offer value.
Discounting your self worth and the worth of your home inspections firm, with all the benefits and backing that you provide is just the opposite of what it takes to survive. You might be able to bumble along and pay your fixed costs but you will never attain the marketing perspective that will break your company away from being a commodity, and achieving the profits that you got into this business for in the first place.
Many inspectors forget that getting the phone to ring and booking the appointment is 80% of what they do. Setting your pricing right, is a key factor in booking appointments now and in the future.
Remember… We are not Home Inspectors! We are marketers who happen to deliver Home Inspection Services! If you can’t get your head wrapped around this, you might just as well work for another inspection company and keep your bills paid.
*Copyright © 2006 by Bob Kille. To read other home inspection marketing related articles, or to view home inspection software and book publications by Bob Kille, click this link. *www.inspectorsuccess.com](http://www.inspectorsuccess.com/)