EP 126: Unlocking Profit Potential through Pricing Strategies with Per Sjofors

Introduction

Welcome to the DYB Podcast! In this episode, we dive into the world of pricing with thought leader Per Sjofors, author of “The Price Whisperer.”

Per discusses the most common pricing mistakes companies make and shares valuable tips for painting contractors to effectively price their services.

He emphasizes the importance of differentiation and building value to avoid being seen as a commodity. Per also provides a unique method for contractors to determine the price range that potential customers are willing to pay.

Tune in to learn how to strategically price your services and maximize profitability.

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LINKS

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TRANSCRIPTION:

00:01.84 dybsteve Today’s guest is a thought leader in everything pricing and how companies can use pricing to drive higher growth, sales volume and profits his new book. The price whisperer a holistic approach to pricing power is available at booksellers nationwide and online. He’s a forbes business council thought leader identified by thinkers 3 60 the top 50 global thought leader in sales and by ink magazine top 10 leaders that make a difference in 2023 pure show force welcome to the show. 00:33.10 Per Thank you so much. It’s a pleasure to be here and I’m looking forward to to this conversation. 00:41.27 dybsteve Thank you! What are the most common pricing mistakes companies make. 00:49.99 Per Um, well the I would say that the most common mistake is not but is that many companies doesn’t matter what size many companies. Don’t really think that pricing is important. They kind of know it that is important but but but instead of instead of um, really understanding what their their customers are willing to pay. They look at a competitor for pricing or. They have some gut feel on what the market is is willing to pay and they use that um or um, they just look at their cost and and add some kind of margin. They think is reasonable right? And and all all of these all of these. Um. 01:32.21 dybsteve Yeah, yeah. 01:39.67 Per Methods if you like to price um, leave money on the table and um and and ignore the fact that um, ah that that that um, um, buyers by the value you deliver. 01:44.87 dybsteve Um. 01:58.67 Per Right? And and um, and and they they don’t care about your cost. They don’t care about what a competitor um may charge if you can precision yourself differently and and provide maybe a better Surveys and and and and so forth. So. 02:15.56 dybsteve Who. 02:17.77 Per So that that is among all the all the companies I’ve been talking to over the years that’s certainly the the most most most common and and most most damaging I would say um, ah pricing mistakes. 02:34.00 dybsteve Okay, yeah, for sure so in the painting Industry. It’s you know it’s common to figure out. Okay, what are your costs and then maybe double that so that hopefully you clear a 50% gross profit or I think the most common way in the painting industry is for guys to. Try to figure out what their competitors are charging and then undercut them which is a big mistake. Would you agree. 02:57.11 Per Yes, yeah, it’s a big mistake and and um the the um the the the ah it’s all about also differentiation right? Um, because if if. 03:09.34 dybsteve M. 03:13.30 Per If A company can understand understand better. Um, why? Ah why? a? Um, you know why? a a a yeah ah a buyer want to buy you know. And then ah that buyer is is often willing to pay higher prices right? Yeah yeah in and it’s it’s It’s not only paint a house or paint and a building. It’s ah it’s more complex than that right. 03:35.11 dybsteve If they if they understand why what they’re looking for. 03:49.82 Per Ah, tell you a a personal story here. The the I need to this is not paint but I need to replace the roof on my um, my on my house and um so I reached out to a bunch of roofing contractors and and and I did that I also did a thing on what. 03:50.69 dybsteve Um. 04:09.29 Per Used to be called Angels list right? and I was bombarded by the most annoying phone calls and the most annoying text messages right? right? Um, in in um, in in ways that there was only one company that didn’t annoy me. 04:09.50 dybsteve 3 04:18.59 dybsteve My. 04:27.14 dybsteve Okay, so this relates directly because this is a case in the painting industry as well. Could you expand on that please How do you mean that they were knowing. 04:28.74 Per Right? yeah. 04:36.84 Per Well first off, um, um, you know that they all want accept one I told I told them this is the size of my house. This is the condition of the of the roof. This is the um you know I I have a. Um, you know a yeah ah ranch style house. So it’s 1 floor roof is fairly flat. Um and and they should be able to give me a um order of magnitude quote just but by size right. 04:58.77 dybsteve Um. 05:12.93 Per And and they didn’t they they? um they they wanted always wanted somebody to come out and I know exactly why because they wanted to upsell me stuff right? Um and I don’t want to be upselled. You know? So um. 05:22.78 dybsteve Um, yeah, yeah. 05:31.81 Per And so I haven’t awarded the the gig yet. But he’s going to go to to that one company who didn’t annoy me. 05:36.60 dybsteve Okay, and didn’t annoy you by requesting to stop out and see you instead. They just sent you your price. 05:42.90 Per Um, yeah, yeah, yeah, ah say that yeah they sent me a um, an approximate price right? a price level and and um. 05:48.86 dybsteve No. 05:56.61 Per And they even said and then we can do this and then there’s another price for that which is fine. You know, um, but if you if you’re a roofing contractor. You know what it costs you right? unless you do it for the first 10 times. 06:01.79 dybsteve Um. 06:09.69 dybsteve Um, so question. What? what? if they wanted to meet you to connect with you to make sure that there’s somebody. You’d want to work with. 06:20.70 Per Maybe but but you know, um when when somebody calls me um, calls me and and and um and leave messages 5 times sends me 12 text messages right. 06:38.96 dybsteve Um, yeah, yeah, no I agree with that. 06:39.46 Per It’s too much. It’s just too much and and um and and and they could have mitigated this by for example, saying if you don’t want to hear from us again. Please let us know right. 06:53.75 dybsteve Yeah, yeah, okay, where not. 06:58.99 Per and and I you know I responded to to several of these saying that you should you know you should be able to give me an order of magnitude price without having to come out and a look at it because I’m and I’m a really busy guy and I don’t really want to spend an hour with somebody who’s just. 07:08.14 dybsteve No. 07:18.35 Per Trying to so upsell me something. So so I think that’s um I think maybe having a more um, having a more customer centric and understanding that. 07:18.62 dybsteve Okay. 07:34.31 Per Understanding. The customer is is really very very important and some of these also said things like oh you get 5000 off of what right? Ah um I mean completely useless information. 07:36.43 dybsteve Indeed. 07:44.13 dybsteve A forehead. Yeah. 07:51.33 dybsteve Yeah, yeah, okay, well yeah, thank you for sharing that? Yeah, a quick aside part of our system step 5 on our system is the website and part of that framework now it’s very important to that. 07:53.84 Per So anyway, that’s that’s my little story. Um, rant I’ve been ranting enough I’m sorry. 08:09.86 dybsteve That everything else is built up to it but part of that is listing a price range at a time on there but again for those listening are watching who are not familiar with our system. There are value building blocks up to it. So don’t just list. Your price is very important you put everything up there so that you build the value up to the price and so I agree with you. 08:11.97 Per Me. 08:24.24 Per Yes. 08:27.41 dybsteve The premise that these guys had that they get a shot to you said hey look here’s a range of our prices for you at a time as well. Um, what are some pricing tips. 08:33.51 Per You know, but but you said you yeah you said something very important there and that is build up the value until you get to the price and um and that is a ah and another um. 08:50.85 Per Another another issue that many companies do is that they they they don’t deliver a value proposition and and they they they they don’t Um, um, they don’t try to to um. 08:57.32 dybsteve M. 09:07.20 Per Ah, differentiate themselves in any way. Um, and um and I mean I can I can you know having obviously used contractors many times in my life. Um, there are so many ways. 09:10.20 dybsteve Um. 09:25.26 Per That a contractor can um, can can differentiate themselves right? Um, and and um. 09:39.43 dybsteve Are. 09:39.75 Per Let me know again, let me give you an example maybe relevant or not I don’t know. But as most people have had I’ve had to um you know repair some of the ah appliances I have right? and um. 09:50.93 dybsteve Ah. 09:56.82 dybsteve Um. 09:59.21 Per The normal way right? is that somebody comes out look at it disappears for three days and then comes back with a price or or something like that. Um, so and then I found this guy who um I obviously used every time I needed this kind of service. 10:09.73 dybsteve Mm. 10:17.92 Per Ever since I used him the first time um he he asked me to you know, take a picture of of the um, the um, the exact model number of the appliance and he told me or and and give him a. 10:33.17 dybsteve Um. 10:36.72 Per Ah, detailed description of what the problem was and he didn’t come out. Um he he um he messaged me a day later saying that? yeah I found the the part it’s going to be this much It’s going to be this much for the for the for the service. Ah, and um, um, and does it work if I show up at Eleven o’clock on Friday right? and um and the guy showed up at Eleven o’clock on Friday with the part and the right part right. 11:03.42 dybsteve Um, m. 11:10.75 dybsteve Um. 11:12.62 Per So it’s it’s I mean it’s annoying enough when you when your fridge is dying you know and and but he made every time he made this process. So simple right. 11:17.30 dybsteve Yeah, yeah. 11:24.32 dybsteve So what are thank you? What are some tips that painting contractors can apply today. 11:32.13 Per Ah, in pricing. Um, it’s it’s um I think it’s so important to to realize that not all customers are willing to pay the same price right. 11:44.13 dybsteve No. 11:47.49 Per There are always certain customer segments. Um that are willing to pay more profitable prices often for some level of service that ah other contractors do not supply and and um. And and and that needs to be um, that needs to be discovered right? and and and um I mean I can. For example I can um I can imagine that um there are ways of of. 12:12.68 dybsteve Um. 12:26.26 Per Or providing guarantees that would add value to the customer and that would allow the contractor to pay to charge higher prices simple things like um again guarantees to show up on time right. 12:37.43 dybsteve Um. 12:45.32 dybsteve Um. 12:45.94 Per Guarantees to have the the job finished on time. Um Guarantees guarantees that in in the in the in the truck they’re coming with. They’re not going to run over run over your borders right. 13:02.13 dybsteve Um, yeah, yeah. 13:04.14 Per So stuff like that is simple things and um and so so how do you then find out what folks are willing to pay Well there is a method you can do this and um, the the if if you’re painting. 13:14.30 dybsteve Um. 13:23.12 Per A contractor and and and you actually want to find out what people are willing to pay for for your particular service. Um, what you do and and you do this anonymously right? Um, you you you approach 25 13:42.70 Per Potential prospects right? This may be I mean if it’s homeowners. It’s it’s homeowners right? Um, if it is if if it is a um business to business. It. It may be the um. Um, the the maintenance department of a building I Guess um and um, and and these 25 individuals are not your current prospects are not your current customers. They are certainly not your friends and family and. 14:04.50 dybsteve Mm. 14:18.74 Per Um, you ask them? what the?? um and you ask them anonymously not saying who you are um what what? a price would be for for this paint Job. It could be per Square foot or per per. I don’t know per um I don’t know wall or per per per level or whatever that makes sense. Um, ask them What what is a price that is so low. You think that we are not going to go be able to do a good job. 14:42.96 dybsteve Beautiful. 14:54.69 dybsteve Yeah, that’s interesting. 14:55.54 Per Right? And and and because there’s psychology in pricing and um I mean we’ve all been there right? We we hold something in our hands either physically or metaphysically and and. 15:06.37 dybsteve Um. 15:11.57 dybsteve Are. 15:13.99 Per We we say to ourselves I kind of want to buy this. But at this price this can’t be any good So I won’t you know and that that applies to to um, ah you know to painting contractors as well. Right. 15:22.39 dybsteve Absolutely oh yeah, absolutely. Ah. 15:32.47 Per So um, so you approach these 25 people and and and you describe and particularly describe the the differentiators. Whatever those may happen to be you know? um. 15:46.74 dybsteve Mm. 15:48.24 Per And and and then you ask what is a price for the for for a paint job for your installation again per some um measure that is generic. Um and and say what is a price where you think that we are going to over promise and underdeliver that the paint is going to. 15:57.57 dybsteve M. 16:08.90 Per You know, fall off within six months or whatever it may be um or that we that we yeah we over promise and under deliver. What is that price and then secondly you ask now let’s about look at the flip side. 16:08.56 dybsteve And. 16:18.43 dybsteve Mm. 16:25.37 Per Say that we are going to deliver all our guarantees and we’re going to do. We’re going to be quicker than than we promise. Um, the the the paint job is going to be absolutely spectacular in quality and what is a price that is so high that you still don’t want. 16:37.98 dybsteve Who. 16:44.48 dybsteve M. 16:44.93 Per Did low want to buy it and then you take the the averages of these two um interviews if you like 25 too low 25 too high and and you suddenly have a range of where your pricing should be right. 16:53.59 dybsteve Um. 17:00.92 dybsteve Um, very interesting. Yeah. 17:04.23 Per Um, and obviously for profitability you you want to ah put that price towards the higher end. Um and and and then you can continue doing this because obviously some of these 25 people you talk to is is going to be real prospects. 17:09.11 dybsteve M. 17:23.37 Per Right? Um, and um and you start by doing 25 in a particular market a vertical market right? that you’re interested in could be a geographic market. It could be a type of customers or whatever. Um, and. 17:23.82 dybsteve Um. 17:43.31 Per And as you continue this process you you do another 25 in a different different market maybe in a different geography maybe in a different kind of buildings or what have you you know office building versus warehouses you know stuff like that. Um. 17:57.34 dybsteve Um. 18:02.92 Per And then you can see how your pricing may change based on the profile of the customer right. 18:12.47 dybsteve Indeed very interesting. Thank you? What’s ah, what’s the single most effective advice you would give to a painting contractor regarding pricing. 18:21.99 Per Ah, well, it’s it’s it. It is really what we just discussed to to um to make sure that you differentiate yourself in one way or another um the the. 18:28.75 dybsteve Um. 18:39.98 Per Um, because differentiation is something that leads to pricing power and if if you are see if the company is seen as a commodity. Um it it is sold on low price alone right. 18:48.14 dybsteve Um. 18:58.55 Per Um, but it’s differentiators that that leads um customers to be willing to pay higher prices. 19:06.62 dybsteve Okay, so build value in it by differentiating by setting yourself apart so that you don’t look just like everybody else because when you look like everybody else, you’re a commodity and then they base it off price alone and nailed it. Fantastic. Thank you Pierre again? ah your book is the price whisper. 19:10.83 Per Correct yeah correct correct. 19:24.13 dybsteve If somebody would like there. It is fantastic. All right I’m sure you can get on Amazon and any which your local book stores if somebody would like to reach out and follow up with a questioner just reach out to you. What’s the best way they can contact you. 19:24.62 Per Um, it is it is here? yep. 19:40.56 Per Yeah, the the the the really best way is just do a Google search for the price whisper. Not only will you find the the book. You’ll you’ll find I have a Youtube channel um, and you get some 10000000 hits if you if you. 19:43.87 dybsteve Okay. Is. 19:56.51 Per Google the price whisper and and most of them are me so um, so and I write a lot of white papers and and so forth. So it’s lot to learn. 19:57.97 dybsteve Where fantastic. Okay, pay right on. Thank you Peer Appreciate it very much. 20:10.30 Per Thank you so much Steve.