Episode 13
The Power of Value Stacking and Mastering Pricing Conversations
Explore the art of "Value Stacking" in this episode of Connect and Convert with Dennis Collins. Discover how to demystify pricing for products with no clear reference point, especially in the home services industry. Dennis walks you through a proven technique that breaks down the factors influencing HVAC system pricing, empowering customers to make informed choices. Gain insights into equipment quality, installation methods, quality control, dwelling specifics, and ductwork condition, and learn how discussing these elements builds trust and sells effectively.
Transcript
Hi, it's Dennis Collins again.
Dennis:Another episode of Connect and Convert, where we share insider secrets
Dennis:for small business sales success.
Dennis:Today I'm going to do something a little different.
Dennis:I would like to demonstrate for you a technique.
Dennis:That is proven to be a very effective way when there's no
Dennis:easy or well known reference point for the price of a product.
Dennis:It's something that you don't buy very often, maybe once
Dennis:or twice in your lifetime.
Dennis:And you have no real reference point, no anchor as to what that should be.
Dennis:And we find that a lot in the home services industry.
Dennis:I found that taking a few minutes to describe how price is determined is a very
Dennis:effective way and more comfortable way to discuss that difficult topic of price.
Dennis:It's never easy, but I have found that this technique makes it a little easier.
Dennis:So here we go.
Dennis:Here's a demo using an HVAC sales call as an example.
Dennis:Okay.
Dennis:Mr.
Dennis:Customer, I promised, and here we are.
Dennis:We've now come to the discussion about price.
Dennis:It always seems to be a big mystery about how do HVAC companies come up
Dennis:with the right price and you can find data all over the place, obviously
Dennis:from your neighbor, your friends, your family, you go online you come
Dennis:up with all kinds of different prices.
Dennis:Personally in my experience, I have been able to sell units,
Dennis:HVAC units for up to $40, 000.
Dennis:So I know it's confusing.
Dennis:What's the right price?
Dennis:Most of our customers have either never replaced an HVAC unit or have only done
Dennis:it once or twice in their lifetime.
Dennis:So it's usually hard to figure, what should I pay?
Dennis:How do I know that I'm getting the right price?
Dennis:The price they have is, I get a lot of people say yeah, 10 years ago, I spent X.
Dennis:Well, that was 10 years ago, and they don't really have a recent frame
Dennis:of reference for today's pricing.
Dennis:So how familiar are you with how the final price of a new HVAC system is calculated?
Dennis:Okay, as I thought.
Dennis:Probably not too familiar.
Dennis:Do you mind if I take a few minutes to walk you through how we arrive
Dennis:at the price of an HVAC system?
Dennis:We do things a little differently here.
Dennis:Most others won't take the time and effort to walk you through this, but I'd like
Dennis:to quickly walk you through the process.
Dennis:Would it be okay?
Dennis:Do you have a few minutes?
Dennis:I'd like to show you a framework of how it goes.
Dennis:Okay, there are five elements that are basically used in determining
Dennis:the price of your new HVAC system.
Dennis:Number one is obviously the equipment cost.
Dennis:The compressor size, the quality, the brand, the air handler, the
Dennis:stages different stages that are used the geographic location.
Dennis:Believe it or not, depending on what state you live in, there are certain
Dennis:brands of air conditioners that do a better job in certain states than others.
Dennis:They're rated, for instance, for higher temperatures.
Dennis:So, we will discuss all of those things.
Dennis:The size, the quality, the air handler, the stages, et cetera.
Dennis:I'll explain all of that.
Dennis:Next and maybe even more important is the type of install.
Dennis:There are all kinds of ways to install an HVAC system.
Dennis:We do it properly.
Dennis:Everything is custom measured.
Dennis:Once, twice, three times to make sure we have it right.
Dennis:All the elements that need to be produced and customized for your home,
Dennis:we customize to the exact measurements and exact specifications of your home.
Dennis:There's no such thing in HVAC as one size fits all; that doesn't work.
Dennis:That is not considered a good install.
Dennis:We'll walk through that.
Dennis:How about quality control?
Dennis:How many inspections during and after the install?
Dennis:In our case, we are talking five inspections during, after, and six
Dennis:months after, and one year after.
Dennis:Inspections to make sure that what we install is running perfectly and is
Dennis:cooling or heating your house comfortably.
Dennis:The fourth thing is the type of dwelling we're talking about the
Dennis:type of building is it a one story?
Dennis:Is it a two story?
Dennis:What's the square footage?
Dennis:What's the heat load?
Dennis:We will actually calculate the heat load to find out exactly the right
Dennis:size, the right type of system for you.
Dennis:And the fifth thing that we have to look at is the condition of your ductwork.
Dennis:Obviously, your ductwork is what makes it gets the air to the places it needs to go.
Dennis:If it can't work properly, if it's clogged, if it's dirty, if it's unsealed
Dennis:and leaking, then no matter you're wasting your money, putting in a brand new HVAC
Dennis:system without making sure the ducts are claimed healthy and are not leaking.
Dennis:So those are the five things that an HVAC company looks at
Dennis:when trying to assess the price.
Dennis:In our experience and having a dialogue with our customers, we find that most of
Dennis:our customers consider all of these items, especially the install when it comes to
Dennis:do with the longevity, the reliability and the efficiency of your new system.
Dennis:You told me that you're interested in longevity, reliability and efficiency
Dennis:and paying attention to all five of those items, is what you will need to
Dennis:do to come up with the exact price.
Dennis:Of course, it's always your choice about what level of comfort, what level of
Dennis:peace of mind, what level of reliability and longevity are right for you.
Dennis:In some worlds, that's called value stacking.
Dennis:Obviously, the five things that we pointed out in that little demonstration,
Dennis:all of which can be discussed at length as to, okay, what type, the
Dennis:size, the install, the quality, all of these determine the eventual price.
Dennis:What level of equipment do you want?
Dennis:Do you want the absolute best in class?
Dennis:Okay.
Dennis:What type of install?
Dennis:Do you want a shoddy install?
Dennis:A very one size fits all install or do you want a custom install?
Dennis:How about quality control?
Dennis:How about type of house?
Dennis:What are we trying to cool?
Dennis:And how about your duct work?
Dennis:And I have found when you walk a prospective customer through those five
Dennis:items, all of a sudden, the mystery, the fear of the price disappears.
Dennis:It's then their choice.
Dennis:What level do you want to achieve in each one of these areas?
Dennis:It's your choice.
Dennis:I hope this little demonstration, shows the value of value stacking.
Dennis:Of taking the values that you offer, whatever they may be, and breaking them
Dennis:down and explaining them to the customer.
Dennis:Especially if you sell a product that people don't buy very often.
Dennis:They just don't know how to assess it.
Dennis:They don't know how to figure it.
Dennis:And you're probably gonna be one of the only ones whoever does this.
Dennis:Most companies we have found are a quick price and goodbye on to the next.
Dennis:Somebody who will sit down, explain, and talk with the customer builds trust.
Dennis:And as we all know, trust is what sells.
Dennis:I hope you enjoyed this episode of Connect and Convert.
Dennis:Please join us again soon.
Dennis:I'm Dennis Collins.
