EGIA

Ask the Experts | Competing with Internet Prices for HVAC Products

Question: How do you compete with the internet on parts prices vs. our cost?

Weldon Long; EGIA faculty member and New York Times Bestselling Author:

You know I think that you just have to deal with it like everything else in life, you have to deal with it head on. I think most people have common sense and they will raise issues and try to compare a number on the internet to what you do as a full-service company. But deep down there's a part of them that knows there's a difference.

To me, the key is just calling BS on it and showing the customer what the truth is. I just had an example with a guy I was going out on a call with just last week in California. Early on the presentation he likes to do some price conditioning up front, not really qualifying for budget per se but just kind of feeling the customer out for price. He said, “Mr. Homeowner, did you have any idea what a new system like this would cost?”

The guy said to him, “When I looked on the internet, I saw that they were anywhere from around $2,000 to $5,000.”

Now, basic systems are going to be $12,000 to $13,000 on the low side and $25,000 on the high side. It was great to see because the comfort consultant never skipped a beat. In fact, to some degree, he anticipated it because he gets it all the time. People have a ridiculous notion about what stuff costs.People always think something they're going to buy is going to cost less or should cost less than it does. They’re always going to think it should cost less.

So in this case, when the homeowner said $2,000 to $5,000, what I trained these guys to say is, “Well you know Mr. Homeowner, the reality is I don't know how they could do it for $5,000 because if we’re being transparent here, skilled labor, quality parts, and permits are going to cost us more than $5,000. We find that in our market, systems go from $12,000 or $13,000 on the low end to $20,000 or $25,000 on the high end. Is that going to be a range you’re comfortable with?”

Right away, the guy that just said $2,000 to $5,000 on the internet comes right back and says, “Well, I'm probably going to be closer to $12,000 or $13,000 range.”

The homeowner knew that it was probably unrealistic. We've all had the experience on the internet that you can't always trust what you read. If you think that they could do the same thing for $2,000 to $5,000 that we’re going to do for $12,000 or 15,000 is completely unrealistic. There's cheap and then there’s suspiciously cheap. That seems suspiciously cheap, wouldn’t you agree? People know that if it’s too good to be true then it probably is too good to be true.

One of the the other things I like to tell people, especially when homeowners are talking about parts and components of the system, I would say, “Mr. and Mrs. Homeowner, you could go online right now today and go to one of these auto parts sites and you could probably buy every single component that you need to build that GMC Yukon out in the driveway. Every single component is out there available on the internet but assembling that GMC Yukon is a whole different experience.

In fact, if I had two brand new GMC Yukons sitting right next to each other, identical in every way, and one was $40,000 and one was $50,000, which one would you buy? No tricks. You buy the one that’s $40,000, right? Of course you buy the $40,000 one.

But what if I told you that the $50,000 one was assembled by GMC Engineers and the $40,000 one was assembled by the local 4-H club, which GMC Yukon do you want now? Of course you pay the extra $10,000 to have it put together by the professionals.

Mr. and Mrs. Homeowner, this is what we do. We pull the components and use our years of experience and specialized training skills to build a system. 90% of the effectiveness of this system and how it performs is going to be based on how I put it together. The magic happens based on how we install it and put it together, just like that GMC Yukon.”

So, I think there's two or three examples that you can use to kind of diminish the the expectation that they're going to get parts on the internet. I had a situation recently on a small part that my team installed for $200 or $300 and then the homeowner said they found it on the internet for $30.

The technician turned to the homeowner and said, I understand you can get it on the internet for $30, but does that include them bringing it to you? Of course not. Does that include them installing it? Of course not. Does it include part of the salary of the gal that answer the phone when you called the office? Does it include the cost of the truck to bring it out or my years of training and skills? That all is packaged in there, not to mention the warranty.

Once we put it in, we own it. If there’s a problem six months from now or a year from now, we’re going to fix it. If we have to replace the part, we do! That's not going to happen with the stuff on the internet.

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