DarrenToday’s marketing tip isn’t so much a marketing tip as it is a suggestion, in story format. As you may know, part of what I do is make follow-up phone calls for some of my bigger contractors on the sits they go out on that don’t close. I do this to ask consumers for their feedback as to why they opted not to choose my client.
And you will be amazed at the answers
Everything from “the guy smelled like smoke” to “the price was too high” are answers I hear all the time. But on this one particular call, Mr. Jones really set me back on my heels.
My client is a kitchen and bath remodeler who does great work at fair prices. But his take-rate has been pretty low for the last couple of months so I suggested we find out right from the horse’s mouth why people were opting to go somewhere else.
After about 40 minutes of phone calls I got a hold of Mr. Jones. After going through a series of questions with Mr. Jones, I finally got down to the estimate and price. I asked Mr. Jones if he thought the price was fair and reasonable.
He said he had no idea
I asked him to qualify what he meant. He proceeded to tell me that he was an accountant by training, and works with numbers all day. He also told me that statistically speaking, it was almost impossible for his estimate to be submitted to him in round numbers.
$22,000
That’s what Mr. Jones’ estimate was for a new kitchen, so I asked him what his problem was. Again he reiterated that it was highly unlikely that his estimate would come out to $22,000 even. So he wasn’t sure if my client added the bill upwards or downwards, and if so, by how much. $500, $1000, $5000?
You see, round numbers are always fake
I forget where I read that, but as soon as I had this conversation with Mr. Jones it was like a flashing sign in the back of my head.
Now, this may seem like a minor detail to you, and maybe it is, but it wasn’t to Mr. Jones. And as you know, people will come up with hundreds of different reasons not to do business with you. It may even seem silly, but I know contractors who issued their first invoice with invoice #367 to give the impression that they didn’t just start their businesses.
I went back to my client and mentioned to him the issue that Mr. Jones had. I asked him to pull the last three months worth of estimates so we can review them together. Lo and behold almost 2/3 of these estimates ended in round numbers. When I asked my client about the statistical anomaly, he claims that he did it to make it easier for the homeowner. He said he only rounded up to the nearest hundred dollars and made mention of it to most of his prospects.
Now, I don’t know if this is the cause for slowing sales or not. But if it affected one person, there’s a good chance it had some kind of an impact on others as well. Or maybe Mr. Jones was hypersensitive to the round numbers because of his occupation? I will tell you this, as I look at the number of 22,000 in the middle of page it does strike me as odd to look at. There is something not right about it. What do you think?
I think you are dead on Darren, rounded numbers seem like a “guesstimate” to me”.
Coming from someone who has done a few estimates in her lifetime I imagine?
And as a die hard shopper, I know 5.99 is better than 6.00!
We always round down to the nearest $5 mark. i.e. $11,565.
Good point Darren,
I’ve seen mention of this quite a few times, one study I read went one step further & said that the most believable numbers were odd numbers and of those, the strongest positiv reaction came from 7 & 9, I believe.
Since I read that study I’ve always rounded to the closest 7 or 9 & it seems to work quite well as I run about a 75% conversion rate, even with a markup of just under 100%.
I agree on the 7 and 9. That is why you see 7’s so much online.
What a great article Darren. Its something we never consciously thought about but all of our estimates are never rounded up or down.
Thanks Heidi! Happy you liked it!
Great observation ! I’v been doing that for the last 30 yrs. The customer assumes that great detail went into estimate if odd number used. Look at the window prices on trucks.
I guess I could see where this would be an issue with many especially with an even number on the thousands. I don’t do that, but do round up cents.
Seven is a good number I agree.
been doingb that for years .make sit look like you really put your numbers together ,I got a job once by 1.12 if i rounded I probally would not have got it
As a Professional Civil Engineer and owner’s representative, I am very leary of proposals received that are round (up or down) unless I’ve done business with this group before and am aware of it. I agree with the other comments that it appears as if the bidder has not put much effort into their proposal.
Although I am a small co., doing only a few decks a year as a general remodeler, I have found that rounding prices one way or another hasn’t been a problem. The relationship that is developed during an initial interview I feel is the most important. An honestly informed potential client doesn’t seem to be concerned with round numbers or not.
Thanks Ed for stopping by. I am happy to see it hasn’t been a cause for concern for your business.
Interesting – as architects with only my wife and myself performing the labor, we have rounded to the nearest $100 that we ‘feel’ would make us ‘happy’ to do the job. We would feel silly presenting a quote ending with something like $…57.00 — maybe proposals rounded to the nearest $100 are turning some folks away.
Our estimates are in print. We have a price list for general purposes. We find this helps be up front on things. We have never come across a competitor doing the same thing. that seems to be a bigger deal.
That sounds like a great idea, especially if none of your competitors are doing it!
I never leave something just by the even thousands like that, I will round up a few dollars here and there but never an even 22,000. A lot of clients work in big numbers for the budget like I don’t want to spend more than 40,000 on my kitchen remodel but they see 39,545.00 and they say that’s ok, if it was 40,200.00 they might say no. I never put cents into the proposal and usually end with a 5 or a 7. Whole numbers definitely look like you are throwing together rough numbers without much thought into them.
Good topic!
Dan
Thanks Dan for commenting. I am interested in your use of 7?
Someone in sales once told me there is an attraction to ending a price with the number 7. I don’t know if actually works or not, but sometimes I throw it in there.
Hey Dan,
I ask because ending pricing in “7” has always been an internet thing, so I wanted to see where you heard about it. Thanks for doubling back.
I’ll start testing that in my proposals. If I look at it from the perspective of the consumer, this makes perfect sense.