Why Discounting Kills Home Improvement Profit (and What to Do Instead)

The rep's sat at the kitchen table with the costing face down in front of him. The husband's arms are folded. The wife's looking at the radiator under the window, the one that never gets warm. "That's a lot of money," he says. And before the silence has had two seconds to work, the rep's turned the paper over, crossed out the total and written a new one. Ten percent off. "I can do that for you today."

He thinks he's just closed a sale. What he's actually done is give away most of the profit on the job, and taught that couple his price was never real.

That's why discounting kills home improvement profit. Every pound you knock off comes out of the little bit that's left once everyone else has been paid. And what the customer wanted, more than money off, was a reason to feel certain.

Do the sum before you cross anything out

Most reps think of a discount as a percentage of the price. Owners need to think of it as a percentage of the profit, because that's where it lands.

Take a made-up job, round numbers. You sell it at ten grand. By the time you've paid for materials, the fitters, the skip, the lead, the rep's commission, the van and the office, say there's fifteen hundred quid left. Knock ten percent off at the kitchen table and that's a thousand pounds gone. You've done the whole job, the survey, the fitting, the aftercare, for five hundred quid.

And to get back to where you were, you need three of those jobs instead of one. Three sets of leads. Three appointments. Three installs. That's how owners end up busy fools. Full diary, vans out every day, nothing in the bank at the end of the month. I've sat with owners who were pricing and surrendering on every job, and by the time everything was stripped out they'd made nothing. They just had a lot of work to tell their mates about.

On a call earlier this year I was walking an owner through his lead costs, and it came down to one line. It's always down to making sure the numbers stack. A discount handed out on every second appointment means they never will.

The customer wasn't asking for money off

I've been selling home improvements for more than 40 years, starting out door to door with gas central heating, and I'll be honest with you, price is only an objection where there's no value present. When someone says "that's a lot of money", nine times out of ten what they mean is "I'm not sure yet".

Not sure it'll fix the cold back bedroom. Not sure you're the right company. Not sure it's the right time. People buy certainty. They want to know it'll solve their problem, at a price they can live with, in a timeframe that suits them. Not the cheapest price. A price they can live with.

So when the rep drops the price straight away, he answers a question nobody asked and leaves the real one sat on the table. Sometimes they still don't buy, and now he's left a cheaper figure behind for the next firm to beat.

And the next firm will. If your costing goes out itemised line by line, all neat and professional, they can forward it to someone else and say "can you skim a bit off that?" You've done the hard work, and somebody else gets the job on price.

Too keen

When a customer pushes on price and the rep jumps straight in with a lower figure, I've got two words for it. Too keen. I generally don't jump like that, and nor should you.

Isolate it first. "Other than price, is there anything else bothering you?" Go through it one thing at a time. Happy with the windows? Happy with us as a company? Happy with how I've looked after you today? If something else comes up, that's what you deal with, and the price usually stops being the problem.

If it really is only price, then ask how far apart you are. Where would they need you to be? Then: "If I can get there, are we happy to go ahead today?" And take a minute over it. Work it out on the pad. Don't make it look like the number was always there waiting.

If you do move, have a proper reason

There are times I'll move on price. But never without a reason the customer can believe.

On my own conservatory roof jobs, if I'm doing one round the corner and I can order both lots of materials together, I get a better rate and I can pass some of it on. That's real. It's tied to something. And the customer can see why the price changed.

A discount out of nowhere does the opposite. It makes it look like you tried to rob them with the first figure, then dropped to close them. Customers aren't daft. And these days it's not only your reputation at stake. The CMA can now fine firms directly for misleading pricing and false urgency, so the old "this price is only good tonight" routine is more trouble than it's worth.

The other thing worth doing is to give value rather than take money off. The little extra other firms wouldn't think to mention, popped on at no charge. But tell them up front, as part of the offer, not as a sweetener when they're wobbling.

Own your price or it will own you

All of this goes back to how the price got there. In the 7 Steps to Sales Mastery, the price comes after the WHY, after you've found the pain and the customer's told you in their own words what it's costing them. Get that part right and the price is just the next step. Rush it, and you'll find yourself reaching for the pen and crossing figures out.

Own your price or it will own you. If you don't believe it, they won't either.

If you think discounting might be eating your profit, take the free 2-minute Sales Leak Assessment and book a free 30-minute discovery call with me, and we'll find out where the money's going.