Selling Value and Pricing for Profit

Rick Jones
April 17, 2014
COLUMN : Dealer Perspectives

In 2009, I joined the Window and Door Dealers Alliance to network with other dealers and suppliers to better understand the business. The information we WDDA members share is invaluable; we discuss efficient dealer operations, more effective marketing, and better sales management, along with improved selling programs. The WDDA staff provides information regarding government agency regulations and congressional legislation. Our supporting manufacturers provide knowledge about new products and consumer trends based on a more global view.

And, we discuss economic factors. At the Window and Door Dealers Alliance Forum last year, for example, we heard a presentation by Jonathan Smoke, Hanley Wood chief economist, who said dealers could expect a more favorable year of business in 2014.
 
My opinion, however, is that it will not be business as usual. Windows and patio doors will not be a priority purchase in 2014 without the tax credits of 2008 to 2013 bolstering sales. Consumer household incomes will not recover to pre-recession levels. And dealers will see new competitors enter their market.
 
In these market conditions, it is vital to price products at a fair value for the business, yet at an affordable price for the prospect, keeping the current economic climate in mind. The buyer must feel that he or she is getting the best products and services at a fair price. The seller must make a profit and get a referral based on the value it provided, not the cheapest price.
 
This sales call is an example of buyer and seller both achieving satisfactory results.
 
I was contacted by some friends that wanted my help finding reasonably priced windows for a daughter and her family. The 1980’s home had the original 16 national brand, wood double-hung windows and a twopanel wood patio door. Many of the window sashes were badly rotted—one of them had a large hole that the son had sealed with duct tape.
 
The family had shopped for new windows for at least two years with quoted prices ranging from $18,000 to $26,000—pricesthat were well outside their budget. The family provided brand names to me that, from my experience, indicated the sellers had inflated some of the prices. The family confirmed that some sellers included price drops during the sales presentation to encourage a purchase. Still, the family simply could not spend $18,000 on windows.
 
Eventually, we found them nice vinyl windows for $8,600 from a nearby dealer. The products were sold through a network of regional manufacturers and had window ratings well within the range of Energy Star requirements for the Northern Zone. I was there during the installation to examine product quality and review installation steps.
 
I spoke with the seller after the transaction and learned that he earned a very satisfactory gross profit for the project. His pricing supported his business operating model and included profits to further develop his business. I asked if he offered a discount; he did not. Instead, he added in a mid-priced patio door as a way to close the sale. The family was only concerned about the windows and was planning to replace the badly worn door later. He made it easy for them to say yes to his offer.
 
The call demonstrates that products can be sold in-line with homeowners’ abilities to pay, and I believe it is a scenario that will be repeated in 2014 until there is a full economic recovery. Consumers will continue to seek products within their financial limitations until they’re confident that the economic turmoil has subsided. I believe we are still a year away from a good market.
 
 
 

A member of the Window & Door Dealers Alliance advisory board, Richard (Rick) Jones is the former president of several window and door companies. He is now sharing his experiences with dealers though the Contractors Advisor.