Pricing Psychology Secrets | Why to Offer 3 "Price Packages" for Retail Roofing Sales

Hey, Adam here, the roof strategist and welcome to today's video. I'm going to be continuing some training on selling retail roofs and what's been highly requested after I did my first video, which you can take a look at on selling retail roofs, the fundamentals in the sales process and my favorite closing technique. Check out that video if you haven't seen it. And my inbox filled up with pricing psychology questions. So why did I mention in that video that you should be offering three prices when selling retail roofs? So today's video is on pricing psychology specifically for retail. Now what I want to jump in and talk about is the concept of price anchoring. Price anchoring is how we all make decisions where we anchor the idea of how much something costs to usually the first thing that we either see or what we've already spent money on. So there's a couple of examples I'm going to give you outside the roofing industry. If you talk to someone in San Francisco about the cost of a home and they spent 1.5 million on an 800 square foot house. House, and then you talk to someone in Tulsa, Oklahoma about what an 800 square foot condo costs, the prices are going to be a little bit different. In fact, probably over a million dollars apart. But the person in San Francisco looks at real estate anchored against the prices for those market. So people that move out of a crazy real estate market like San Francisco and they move to somewhere like Tulsa, Oklahoma, or somewhere where housing is a lot more affordable, they look at housing as a bargain. Even though someone in Tulsa might look at a house and say that one's more expensive for this market. So that's a non, excuse me, an example outside the roofing industry. And the other one I want to give you is when it comes to eating out at restaurants, you'll find, especially at more upscale restaurants, there's usually that item on the menu that might be 40 bucks or 45 bucks or 60 bucks. Right? The surf and turf, whatever it is, they put that up there because when you look and you see that one high price item, which funny enough is usually the lowest margin, they don't really expect to sell them. But when you see that $60 surf and turf, all of a sudden a $20 hamburger doesn't seem so ridiculous. But if you went to a restaurant, the most expensive thing on the menu is a $20 hamburger. You're comparing that hamburger against the rest of the menu. So when we present pricing to our customers, we always want to lead with a high price because that's their first impression of the pricing. We want to showcase the value first. I'm going to go another example here in the food industry, in the restaurant industry to help you understand price anchoring. So let's think of this. If I'm going to sell a $60 surf and turf, do you think the line item is just like steak and lobster? No. Right. It's like filet mignon, freshly imported, so and so, basked in butter, served with a demi glaze, you know, catch of the day, lobster sizzled in a saffron. Like they really create this poetic and powerful description to support the pricing. So someone looks at us like, oh my gosh, that sounds amazing. So when we're approaching roofing and price anchoring, when we have that high price, it's not just showing three prices, it's explaining the value behind those which we are going to talk about in relationship to the auto industry. Just like trim levels for cars and trucks. Okay, now here's what I'm. I'm going to just talk Ford because I know Ford's, you've got your standard XLT and then you might have a lariat and then you have platinum. Okay. And I know that there's other trim levels, but generally speaking that's a way to clearly name a subset of what sort of options on the vehicle. But within each trim level you can have add ons, you can have upgrades and downgrades. Right. So it's like this is the base. Then you can add additional items. So I want you to think about that because naming is really important, which I'm going to get to here in a minute. When you show those three different prices because it's identity, you're validating the price. The roofer before you probably didn't itemize it. We've seen it all right, it's like 30 square cost x dollars. That's the roof. But if you sit down using the trim level of a vehicle concept, right. Names of packages, which I'll share too, you use proper price anchoring like restaurants use. And by the way, the main reason for that is to get people to buy the second option, which is usually the most profitable. Roofing is not going to work the same in terms of profitability, but you get the concept, right. We're making our decision off that expensive item. And when we support the name with Descript, it validates the price. So let's talk about this. So we've all seen the pricing tiers. We have the good, better and best option, right? So you can see Here on this side we have $3 signs versus $2 signs and $1 sign. And each one of these packages can have a name. You'll notice that roofing shingle manufacturers will often use names of their warranty, right? The Golden Pledge warranty. And they create this identity around and there's Silver Pledge and Platinum. Whatever it is, everyone has a name. So for you, you can create like the complete system, your proprietary system by naming that package name. The second package name, the basic package. And I'm going to go through kind of how these items work for you to list out what's supported in each name. So let's say you want to lead with this high package first because you always show the most expensive price first. If you don't do that, which is a common mistake, if you show the lowest price first, what happens with price anchoring? You're making the decision off the lowest price, things get more expensive. So the idea is to lead with the highest price. That's why if you go shopping for a vehicle, they're not going to show you the stripped basic XL version of the truck. They're going to show you something nicer because then the cheaper option is more palatable. Same thing if you're shopping for a home. A realtor is not going to show you something at the bottom of your price range. They're going to push the envelope. They're going to show you something at the top of your price range. Here's what you can get. It also helps set realistic expectations. Alright, so on this option you can name it and let's say your company's Platinum Roofing. I'm just making up a. For this one, you can call this like the Platinum plus complete roofing system for example. And then itemized by it, you could use a more like a designer ridge cap, a designer shingle, maybe certain colors. And then you say, hey, for this one we use the 30 pound felt, two rows of ice and water shield. We replace all the box vents with ridge vent. We use our attic ventilation calculator to make sure the ventilation is up to code. And we have an extended warranty from our company along with third party warranty offered by our shingle manufacturer. So boom, there's like the bread and butter, the top of the line. Okay, Then on our middle option we have a name maybe instead of the Platinum Preferred system. It's like the Platinum Essentials, right? Essentials is a common word for saying you've got everything you need. And in that think of it like software companies. When you sign up For a software, the most expensive version is everything that the software can do. All they do for the other levels is literally remove parts of the service. So for you, start with the big one, then move into your center package and just remove some of the expensive items. Maybe you can save some money and save the customer money on the ridge cap. Maybe it's a specific type or line of shingle. You know, maybe on the advanced one you're doing a Class 4 impact resistant shingle, designer shingle, stone coated steel, something, right? So on this one you can go one step down, one step down in color, one step down in ridge cap. 15 pound felt versus 30, maybe your standard warranty for your company and your extended warranty from the shingle manufacturer that you prefer to use or if you're a certified installer. Okay, so there's your middle of the road one. Then we move down to the basic. This is your. The roof's going to keep that home dry, right? And you can go to the most basic install, remove and replace everything as it is. And again, no warranty extended from the manufacturer. So now that customer has choices. And the beauty of leading with this one before you reveal the price, because by the way, only for this demonstration that I put the prices up top, typically you're going to want to put them at the bottom. Okay? So the name everything that's in it, price on the bottom, and then you can do a side by side comparison. That way, if someone might want, say the first or the second option, just like with cars, like I showed you, you can add options. So if you want to get an xlt, but you want to upgrade, say to leather seats, that's an option. If someone wants the basic roof, but the extended warranty, you can always upsell it. But when you approach your retail sales in this way, you're going to differentiate yourself from other roofing companies, other bids, and position yourself as an expert with a proprietary system. And a very unique approach to selling a complete roofing system, while also using price anchoring in your advantage to help customers choose either a middle option, even a lower option that it will likely be higher than competitors because you are leading with value. Right? And I want to share one. I'm going to close with one story that has nothing to do with roofing. I have studied the marketing greats of our time. There's a guy named Joseph Sugarman, he was a direct response guy that was, that was sending direct mail back in the 70s and there was a company selling smoke detectors, okay. And he was tasked with selling smoke detectors via direct mail. So what does he do? He finds that in this smoke detector there's this special metal in there that makes it receptive to sensing smoke and starting the alarm. Well, it's in every single smoke detector, but no one talks about it. So what he did is he talked to every prospect in their letter and said, I have this very special metal in our smoke detector that makes it hypersensitive to keep you safe. And that's why ours is so good. But here's the funny thing. Everybody's doing it. So a roofer the reason I'm sharing this with you is if a roofer just says remove and replace 30 square roof x dollars and you come back with the name of a system and an item of creating this value of explaining what's all inside, they could be the exact same roof. But I guarantee it, if you put both of those side by side and ask the homeowner which one's more valuable, are they going to point to the 30 square one line handwritten while you're sitting in your truck piece, or the one with a name with all these pieces that makes it unique to you and the professionalism that you stand behind it has a higher level of perceived value. So use this three tiered approach and I would like to give you a little assignment. If you're selling retail, put these three packages together, name them for your company use, make it easy to understand, list out what's included and you can get a base price point. Oops, looks like my machine died. Get a base price point to start at. You can always adjust later. You can give your sales team or empower your team with a price per square with a flat dollar amount. Add on for additional layers. Steep, but this pricing system is going to help you close more roofs, outsell your competitors and increase your profit margins while leading with value. That's all I have for today's video in the comments. Let me know what other topics you'd like me to cover. When it comes to selling retail roofs, I'm making a big commitment to helping you, the salesperson or the owner growing a team or the sales manager growing a team to become a very strong, well rounded sales force that can sell storm and retail. Because it's not always going to be one or the other. It's great to have a robust skill set, so drop it in the comments. What would you like me to cover? Also give this video a thumbs up if you like it. It lets me know that this content is on point. Subscribe to the channel if you haven't already. And I invite you to go to theroofstrategist.com and claim a free copy of my 120 video library called the Pitch Like a Pro Roofing Sales Training. It's totally free. It's all my videos organized by category. And you can just click on a category and watch videos to your heart's content. That's all for today's video. We'll see you on the next one.