You’re Not a Charity, So Stop Giving Away Money!

By Rich Lindblom, YSN

Your company is neither a not-for-profit organization nor a charity … so why do some of you insist on running it like one?

First, let’s get something out of the way: Do you believe you have the best delivery people, the best installers and the best service technicians in your market area?  If the answer is no, then you have a much bigger problem that you need to address first. You need to find yourself some new department staff, because great service is one of the things that separates BrandSource dealers from everyone else. 

If you answered yes, which I hope was true for all of you, then we need to have a serious talk about pricing, not only for your merchandise but for your services as well.

Too many dealers out there believe that they must be the lowest price in town, and that is simply not true.  Yes, you need to be competitively priced, but you don’t have to be the cheapest. In fact, according to a recent study, 53 percent of respondents said quality is the most important factor in a buying decision, as opposed to 38 percent who said price is most important.  Other studies have shown that many shoppers will instinctively avoid the lowest-priced item and choose to pay more — even for the exact same product — because they perceive the cheaper option as lesser quality. Moreover, with today’s order backlogs, availability is more important to many customers than price.

The point being, don’t worry if you’re $10 higher than the box store down the street. As long as you’re in the ballpark, you typically won’t lose the sale based on price.

Related: Price Increases? Sounds Good to Me

What I’m actually more concerned about, and where I see many dealers giving money away, is their delivery and installation charges. 

Quick question: When was the last time you raised your installation fees?  If you don’t know, then the answer is probably too long ago.  Many dealers are afraid of raising their installation charges, even though it’s totally justified.  Your installers are as good as, and probably better than, any other installers in your market.  So why should you be doing the exact same work for less payment than your competition?  The simple answer is that you shouldn’t be.

I made it a practice of pricing each of my top five competitors in the Chicago market — Abt, Best Buy, Home Depot, Lowe’s and Sears — multiple times a year. (These days you can usually find all the information you need online, although you may need to occasionally call the store to get exact details.) I would make up a spreadsheet showing what they charge for each of the installation services my company provided, and then compared it to what I was charging. I would make sure that I was never the highest price on the list in any category, and then I would print out that spreadsheet and use it as a selling tool on the sales floor.  When that customer would inevitably tell me that one of my competitors charged less for a particular installation service, I’d pull out my handy-dandy spreadsheet and show them exactly what they charge compared to my store.

See also: How Much Furniture Shoppers Will Pay for Faster Delivery

And let’s not forget about your service rates too. I know dealers who haven’t raised their service rates in ten years.  That’s just plain crazy. Consider how much your costs have gone up over the same period. (Exactly!)

Your factory-authorized service technicians are among the best in the industry. So why are you worried about what the neighborhood jerk doing repairs out of his car trunk is charging?

I would challenge each of you, right now, to raise your service rates by 20 percent today, because you are worth it.

It’s always gratifying to get your reaction when something I wrote struck a chord. So, if you have a question or comment (good or bad), please contact me at egvrich@gmail.com. I’d love to hear from you.