by Michael Gambino
I can’t imagine that Frank B. Nightingale had much competition at the time when he practiced his business of garden lighting, now called landscape lighting. He was the first to enter the marketplace. However, I can only assume he faced challenges in selling his services for a premium price.
Prospective buyers needed to be educated on exactly what they were getting, so that they could understand the value that existed. Education is a key component to successful selling.
There is no way of knowing, but we can connect the dots and assume that Mr. Nightingale did very well financially. Enough so, that he built the Kim Manufacturing Co. in 1933, a very solid business, which still exists today. Along with the fact that during his lifetime he owned several high value real estate properties. It is safe to say that Nightingale sold himself and his products for a respectable profit.
The Common Mistake
If I had to pick the most common mistake made by new and established business owners in the landscape lighting industry, it’s that they under-value themselves and price their services too low. This practice or trend is also considered, “low-balling” in the construction and home services industry. It’s a practice where you allow low prices to drive your business.
Business owners are motivated to generate enough business to keep the operation afloat, especially so in the early stages of development. But, this is a flawed strategy that will most certainly lead to your company’s demise. Learning how to become a successful business owner means dedicating yourself to understanding business fundamentals. A necessary part of this is learning to price appropriately.
I will admit, I nearly fell victim to the low-balling trap in my earlier days. I was scraping for business any way I could and looking for ways to ensure a constant stream of cash flow, but my bids started drifting lower and lower in price. The middle-class customer would hire me consistently at this lower price point, but I was working harder and harder for less and less.
It wasn’t until I studied salesmanship and practiced those skills that my business really took off. I can remember one particular day that enlightened me so much, it was a tipping point in what I was doing. I gave a low bid on a huge property and instead of getting a gleeful response, “when can you start?”, I get a multitude of questions. They asked why my price so low, as compared to the competition…..if I was going to do quality work…..and, what kind of references I had that could prove my abilities. This threw me through a loop and it opened my eyes to the fact that I could actually be losing business because of my low pricing! What was most concerning to me was that I was losing the demographic I most needed–the wealthy, time-challenged, and highly connected property owners.
Targeting Buyer Class
I have found that most quality-minded, upper-class buyers view low bids as a warning sign. In their mind, they consider that we must be cutting corners somewhere in order to stay in business. A super low bid equals ‘low quality’ work and even worse, this will include services.
It is true that many of the middle-class customers are most concerned with price over anything else. Therefore, this is the competitive factor involved with selling to them.
Middle-class do not and should not be your ultimate target group, as they will not provide for the most profitable jobs. Rather, focus on targeting on the upper-class or higher-end projects, and charge what you are worth. Target this group aggressively and you will effectively be able to support your business and make a decent living. There’s no point in being a dreaded “low-baller” that works more, and makes less.