All of us in the wood flooring industry are looking for an edge. We upgrade our equipment, websites and skills to boost profits and, hopefully, the money we spend puts us a cut above our competitors. But many business owners often overlook one of the most important—and cost-free—tools in our marketing arsenal that can make an astounding difference to your bottom line and help you close more sales. I'm talking about your written estimate.
Think about it—your estimate is one of the last opportunities to convince your prospect you're the one to hire. It can be one of the most powerful marketing tools, but only if it's well-honed and ultra-persuasive.
What does yours look like? Most estimates are a basic one-page form that includes a brief description of the work to be done and a price. The problem with this format is most, if not all, of your competitors are doing exactly the same thing, which means the only difference your customer sees between you and the other guy is price. Your estimate should stand out from the crowd, not set you up to be price-shopped. I've spent more than 10 years testing and tweaking written estimates for myself and other contractors. Here are the two most important principles for crafting a persuasive and powerful estimate.
Never give just one pricing option
Have you noticed gas stations always offer three levels of gas? Why is that? Think about the profit they would lose by offering only one type of gas. The same holds true for your hardwood flooring services and products. If you're offering only a single-price option, you're missing out on a lot of extra profit.
I use a pricing system I call the Olympic Pricing Model. It has three tiers—Bronze, Silver and Gold, just like the Olympics. The system gives the contractor a strong psychological advantage—it changes the question your prospects ask as they read your estimate from, "Will we work with XYZ Contractor?" to, "How will we work with XYZ Contractor?"
Can you see the benefit to getting your prospects to think this way? It's no longer a one-dimensional decision based on price alone. Prospects have no choice but to think:
- "Which option is right for me?"
- "What's the difference between these options?"
- "Why haven't these other businesses given me such a comprehensive choice?"
- "If I don't choose the Gold or Silver level, will I regret it later on down the road?"
The Olympic Pricing Model ultimately gets them to ask: "What level of value do I want?" How they answer will depend on if you can…
Build immense value
The key to making the Olympic Pricing Model work is to build up the value of each offering. Remember: Your prospects are not buying your service or product; they are buying the end result of what your service or product gives them. Read that sentence again—they are paying for an outcome. It's a very important concept we need to get into our heads.
There are many things prospects may value higher than just price, so find out what outcome your prospect values most. Here are a few: quality, trust, longevity, support, service, competence, experience, attention to detail, reliability, speed, peace of mind, health, the environment … the list is endless. Find out what things your prospects value the most, discover why they are so important to them and demonstrate how you will guarantee that outcome throughout your estimate.
One of my personal experiences to show how this works was with an international retail clothing chain. Another flooring contractor across the country had just ruined close to $100,000 worth of merchandise because his dustless system was inadequate. I quoted the retail chain an extra $10,000 for the Gold level upgrade for their next store, which included a 100 percent dustless guarantee. I reminded him he had just lost $100,000. Not only that, but his store had to close down for days while they restocked, costing them another $25,000 of sales per day, plus wages and higher insurance premiums. He valued competence, peace of mind, reliability, speed and trust, among other things. He went for the upgrade.
Here's another example: If a homeowner says they plan to stay in the house 15 years or more, then they value longevity, durability and peace of mind. I would use my Silver or Gold levels to highlight a product that would last that long without the need to prematurely refinish again in seven or eight years. Help them see the value in the upgrade—an extra $1,000—compared to what they'll pay if they need to refinish the floors again sooner, including moving fees, hotel and all the extra hassle.
When you build value in your estimate, price will always be secondary.
Proof it works
Let me share a case study from a hardwood flooring business I consult for. He has kindly allowed me to disclose his metrics from the last two years. During that time, my marketing methods funneled over $6 million worth of leads through his business.
Before we started working together, he was offering a one-page estimate with one pricing option. I designed a multi-page, information-rich estimate for him. It built up immense value for his services and introduced two additional pricing tiers to his existing offer.
Over the last two years, this is how his metrics broke down:
- 37 percent opted for the Bronze level
- 49 percent went with the Silver level
- 14 percent invested in the Gold level
The Bronze level matched his original pricing option. That means 63 percent of his prospects opted for an upsell over the only service he used to offer. Most of the increased revenue was profit.
We also implemented a $250 cross-sell—dustless refinishing—which costs him very little to provide, and 86 percent of his clients have added this upgrade over the last two years.
You can imagine what upgrading his estimate has done to his bottom line. This money had always been sitting right in front of him. He just needed to upgrade his "tools" so he could scoop it up.
My suggestion for your business
Out of all your marketing materials, your estimate is the piece that will get read from front to back. Use that time wisely. Position your service or product as unique. Use your estimate to reframe how your prospects perceive the competition. Leave them wondering why your competitors left out so much important information.
Reinforce the idea that your product or service can fulfill your client's higher value need, and your higher-tiered offerings are the obvious way to do it, even if they cost a little more. When you upgrade your written estimate, you're going to gain a huge competitive advantage and a healthy boost to your bottom line.