Get the Most out of your Price Negotiations
Do you think that this process of shopping for a swimming pool would be much easier if each salesperson had to take a “truth pill” before it all started? Well, I would agree.
Salespeople and pool builders come in all shapes, sizes and mental makeup just like pool buyers. Understanding the makeup of your salesperson and builder will help you during your negotiations to arrive at the best possible price for your family’s swimming pool.
Remember it is the final price that goes on the contract, and not the discount. The old method for selling cars had the salesman upping the price so the two of you could haggle to get your best price. The new method is for the car salesman to give you his best price up front. Which method do you prefer?
You will find with swimming pool builders that if it is an older, knowledgeable builder with a good reputation, who gets most of his business via referrals that this builder will be much less inclined to play discount pricing games.
Also keep in mind that if it is a large pool builder, and you are not speaking directly with the owner(s) the salesperson will likely have no authority to lessen a pool price that has not been pre-approved by an owner. If the salesperson does not inform you of an applicable discount when the initial price is given, but chooses to discount later during his visit there’s a good chance that the discount is no discount at all.
Sales negotiation training for buyers
If you Google “sales negotiations” you more than likely will bring up on your computer screen a countless number of sales training courses, sales presentation ideas, good and bad sales clichés, or some other self-help sales aid. It seems as though everything is written from the perspective of the salesperson to help him/her close the sale, and not for the buyer’s benefit.
Very little is written to actually instruct the buyer what to do in a negotiating setting other than a terse statement that reads similar to “the buyer’s goal is to get the lowest price possible for their purchase.” Sure, if you are shopping to buy an identical new 2015 Toyota Camry from two auto dealers, the lowest price may make a lot of sense. But that is not the way it works when purchasing a swimming pool.
Many other factors come into play when buying a swimming pool such as workmanship quality, warranty details, installation scheduling, designer ability, exclusive equipment availability and so much more. Deciding on which builder to buy your swimming pool from is more like shopping for a used 2008 Toyota Camry, and not a new one. Think about it.
Does the choice between two used cars get any easier if they have identical equipment and are both priced at $7,500? Of course it doesn’t. You still need to know mileage, accident history, maintenance history and so much more before you purchase either Toyota. You’ll not only want to see the two cars you’ll want to test drive both before you shell out that $7,500.
Believe me when I tell you this: The very same shopper who goes to all that trouble not to get scammed on a $7,500 used car will happily plop down $50K for a swimming pool without even checking out the history of a pool builder.
Pool Builder Costs
Actual costs for builders will vary tremendously across the country and can even vary significantly in a local community. For the homeowner to calculate how far he/she can push the pool builder for a lower price the homeowner must first understand how the builder arrived at his retail price to begin with.
Profit goal projection for each unit of pools installed is a must for any pool builder. This profit amount also contains projected future warranty “set-aside” money to fund major warranty repairs.
Sometimes pool company owners change their name to dump warranties. So a company that has changed its name without a viable reason should be a RED FLAG – especially if they’re the cheapest guys in town! Remember: ”buyer beware”.
The retail pool cost is the cost of sale amount, the overhead & business expense amount and the profit goal added together. This retail pool cost can fluctuate if there is a degree of difficulty involved such as a retaining wall and drainage, etc.
Pool Builder Possible Discounts
Ask yourself where exactly does a pool builder’s discount come from to lower your price? Do you understand which of the 3 categories affecting the retail pool cost are fixed and which can be variable?
- Cost of Sale for the pool is fixed. Unless a subcontractor or supplier reduces its price in some way no reduction in retail price can come from this category. The only other possible way for this category to allow a discount is if the builder does not pay the supplier or subcontractor which could lead to contractor/supplier liens on the homeowner’s property.
- Overhead and other operation expenses that are assigned by unit to each pool installed is based upon the number of pool units installed. When sales are slower the total sold units reduce and the unit cost amount per installed pool actually increases. When sales are greater the total sold units increase and the unit cost amount per installed pool decreases.
The only way possible for this category to allow a discount is if inside employees are laid off; outside service staff & supervisors are laid off; planned new office equipment is not purchased; planned vehicles and equipment is not purchased; advertising and website costs are reduced; or timely payments of utilities, taxes and insurances are not made.
- Profit goal projection for each unit of pools installed is flexible. Like overhead expenses, there is a projected yearly total for profits that has been allocated per pool unit installed. For example if $10,000 profit for the year was projected for a total of 10 pools that would allocate $1,000 profit per pool to meet the yearly profit goal; however, if there were only 5 pools installed then the profit per pool would need to increase to $2,000 to maintain the year’s profit projection total. Only if the builder is willing to take less profit per pool can this category be used to reduce your price through a discount.
Phony Pool Builder Discounts
Pool builders and their salespersons are smart people. Remember, many of them have taken several of those self-help sales training courses. They know that a homeowner, who is shopping for a pool, is really shopping for a discount. The builder simply ramps up his opening price and then gives the homeowner a massive discount. I have to chuckle because the pool’s net price is virtually the same as it was from this same builder 6 months previously.
Some pool builders buy the cheapest equipment that they can find. They buy closeouts, discontinued equipment and anything else they can substitute to increase their profits. Often, they will include these cheap substitutes when they knock down their selling price. Once again the buyer suffers.
Legitimate Pool Builder Discount
As a designer salesman I prefer giving the best price I can immediately after the swimming pool design, accessories and options have been finalized. If my best price is based upon a time-restricted special I make certain I give the homeowner those particulars at the exact same time – no haggling.
I do not enjoy holding back a “cushion” for the homeowner to wrangle out of me. I have a price that is authorized based upon a price book and I give that price. If it is necessary to go lower in price I cannot make that decision myself. I present the homeowner’s counter offer to my company owner and he is free to make a decision. I believe to do otherwise would not be truthful to anyone.
When a homeowner selects a multitude of options and a larger pool there is going to be more profit built into the pool. That is the direction the homeowner needs to go to get more for their money.
A reasonable discount is based upon the value of the pool and accessories. If you are pricing a bare-bones pool with no accessories or other options there is no place for a builder to go to negotiate. However, if your project includes an 800 sq ft pool with spa, a premium cleaning system, Pebble Sheen interior, tanning ledges, multiple LED lights, and raised bond beam with stone facia and waterfall…yes, there is more movement in price that is available there. Getting more for your money is in itself a discount if you think about it.
Pool companies with the highest opening retail price will also have the largest discount; these builders add on a cushion and then discount the cushion. The best way to get a discount from a reputable builder is purchase premium options where additional profits can be discounted.
Cost of sale for a pool is rigid. Operating costs are also rigid unless employees are laid off, equipment is not maintained to schedules or the company downsizes. Profits are flexible and that is where discounts must come.
It is in the best interest of the homeowner in the long run to purchase their pool from a stable company that is more likely to be in business later on when and if warranty work is necessary.
*Excerpts from the E-Book “Staying out of Hot Water when Buying a Swimming Pool” are used with permission from the book’s author, Dennis F Talley. This E-Book can be purchased at Amazon.com.