This story has a less-than-perfect ending. The contractor has failed to complete the work properly. See this follow-up posting. In light of my policy not to identify contractors negatively in this blog, I am removing references to the company’s identity.
Two years ago, my wife, seeing several houses in our neighbourhood receiving new roofs, decided we needed to investigate a re-roofing. She called three contractors, received quotes, and then suggested I pick one, and get the work done (with my money).
I balked. “Maybe we should call someone else?” I then contacted a company that had done very little work in our neighbourhood, but was a member of an association where we have strong relationships. The estimator arrived, and unlike the other contractors to my perception (I wasn’t home at the time; my wife reported the observations about how the contractors behaved), went on the roof with proper safety gear, and after examining things, returned to say: “You don’t need a new roof now.” He suggested some minor patches that would cost about $500 instead of $9,000.00. We got that work done.
Next year, I called the “don’t need to do the work” contractor again, and he said: “You are still okay, but there is some stuff on the back of the roof that may need attention. It isn’t urgent, but if you would like to wait until the end of the season, we’ll hold our prices.” He gave me an estimate.
I decided to wait for the current season, and then to call him for the work. After all, he had won our trust (marketing success 101) by originally suggesting the work didn’t need to be done. He backed up his observations with his company’s reputation and the top-of-the line roofing recommendations. I compared his quote with the other roofers (from two years ago) and discovered his was about $2,500 higher. But quality would trump price, I thought.
Nevertheless, there is no reason for anyone to be a fool about major purchases. I asked my wife to suggest who she thought was the best of the three roofers who estimated the work two years ago. I would call this company, show the high-priced roofer’s specifications (without any pricing information) and then invite him to provide a quote to match the specifications. I told the roofer’s representative that even if his quote was somewhat lower than the other company, I would still go with it if it was within some level of reasonable range — but I would give him a gift card for his time in writing the second estimate.
He arrived on the scene with an assistant to inspect the roof, but when he saw the original quote, after determining there were no leaks or other major developments, quickly drew up a new quote which he said represented an exact match — in some ways even better — than the other roofer. His price: Still $2,500 less. He also explained his company didn’t subcontract its roofing work (like the high bidder). He had all the necessary insurance, certification and other qualifications.
While my original plans were to call the trust-earning roofer for a review quote, I decided this would be unfair and would put me in an awkward spot. Sure, I could live with a $500 or even $1,000 difference, but I didn’t feel it right to try to force the originally higher-priced roofer down $2,000 or more.
The job is under-way. It appears to be going as specified with a reasonable attention to detail. Job site cleanliness isn’t 100 per cent — there are some cigarette butts on our driveway — but I don’t think it is far out of the norm.
This is a story where price overcame marketing charm. The challenge is that roofing, in residential neighbourhoods with tract-built houses, has commodity-style elements. You can compare the work, house size and other elements. Our goal wasn’t the lowest price, by any means, but obviously paying $2,500 more for a service just because you trust the estimator proved to be too rich for me.
The boundaries between branding, price, sales technique, reputation and the like are sometimes murky, but if you stretch too far out of one matrix element or another, you risk losing margin, sales, or reputation. You can get everything right with your marketing, but you will fail if you set a price too high above the norm in a competitive environment.
This results in rational behaviour in commodity sub-contracting services, of course, but equally causes problems in the design area, where price really needs to be looked at in a much more subjective level — explaining the Brooks Act in the US and the push for Qualifications-Based Selection QBS initiatives in Canada.