TFC #09: Cabinet Pricing Strategies: 5 Common Mistakes to Avoid

Pricing is a crucial aspect of any business, and yet it's something that many people struggle with.

It's tempting to undercut the competition and give in to customer demands, but it's important to remember that pricing is not about making a sale. It's about establishing a fair value for your product or service and building trust with your customers.

In this article, we will discuss some common pricing pitfalls and offer tips on how to avoid them. From price matching to confusing fees and winging it, we'll cover it all so that you can price your cabinets with purpose and confidence.

Price Matching

Customer: I would like a quote for my kitchen cabinets.

Me: Sure, with the options you specified, I could provide your cabinets for $15,000

Customer: (a few weeks later) I had my project quoted with ABC Cabinets and they offered to do it for $12,000. Can you match it?

Me: (desperate for the sale) Sure, I’ll do it for $12,000.

This type of encounter happens way more than a lot of people realize.

Here are a few reasons why people do this:

• lack of confidence in their pricing

• worried about keeping the shop busy

• thinking this will improve the business branding

• can’t say no

As a customer, this would make me upset.

I very much dislike the “the loudest person wins” mindset or in other words, the person who makes the biggest fuss gets the best price.

If a company lowered its initial price simply because I had a competing offer, it would make me lose trust in them.

It immediately brings the question, why didn’t you give me this price first? Were you going to take advantage of me if I hadn’t said something about my other offer?

Instead of simply lowering your price, consider finding other ways to provide value to your customer. This could include offering a payment plan, removing expensive options, or providing services that make your proposal more attractive.

Take It or Leave It Proposals

Never assume you know what the customer needs and offer them one option.

Your most important job is to find the best solution for your customer.

As cabinet builders, sometimes it is easy to only want to build new and modern options.

It is a good idea to give them the proposal you would like to sell them, but you should always include a down-sell or up-sell option.

It is better to make a sale with fewer options than no sale at all.

It’s the classic Good, Better, Best strategy that companies of all kinds have used for years.

Bonus: Offering a higher price first makes the lower options look more appealing.

For example, if I wanted to sell a $2,000 watch, I would put it right beside a $10,000 watch.

Confusing Fees

Hiding fees in your pricing may seem like a good way to increase your profit margin but it can actually do more harm than good.

Building trust is one of the most important things you can do as a business.

If people feel like you added fees that they were not aware of, they will be very unlikely to come back or recommend your cabinets to their friends.

Keep your pricing clear and transparent.

Never assume the customer understands your proposal. Always spell everything out for them to avoid problems later.

Middleman Strategy

How do you determine your pricing?

Some people research their competitors and find the lowest price and the highest price and just pick a spot in the middle somewhere.

I believe this a poor strategy, or rather, not a strategy at all.

Cheap strategy:

Customers of this strategy would likely tell their friends “We really like our cabinets, they may not be great quality, but for the price, it was a no-brainer, plus a lot of people won’t even see the difference”.

Expensive Strategy:

Customers of this strategy would likely tell their friends “Our cabinets are amazing, we love every detail. Our kitchen is important to us and we didn’t want to skimp out on the quality.”

Middleman Strategy:

Customers of this strategy might tell their friends “We are satisfied with our cabinets, we compared a few options and decided on this company, the quality isn’t as good as some I have seen but it’s better than the cheap stuff.”

Isn’t it interesting to notice the difference in how each company might be perceived?

With the cheap option, the customer could love the price. With the expensive option, the customer could love the quality.

The middleman strategy didn’t give the customer anything to love.

Don’t be a middleman. Don’t aim for average.

Pricing impacts your customer’s perception of your cabinet’s value.

Price your cabinets on purpose.

Winging It

Winging it, or as I like to call it, hipshots, can have a negative impact on your business.

Even the most experienced cabinetmaker is prone to misjudge a job now and then.

This can cause major mistrust from customers if they notice any inconsistencies in your pricing from job to job.

Everything in your business needs a system.

There is no reason to do things differently each time you do them.

Sit down and create a standard way of operating and follow it to quit winging it for good.

Conclusion

If I could sum up this article with one piece of advice, I would say:

Price your cabinets on purpose.

Don’t price based on the shop down the road.

Don’t price based on what your customer thinks.

Don’t wing it.

Create a systemized and repeatable process to follow.

Thanks for reading and have a great weekend,

Myron