Here they come. Those pesky competitors. And right beside them are your coveted buyers. Tightly clasped in their hands are sharpened pencils, poised and ready to start marking down prices.
So, what do you do? You get the lead out. You reach for your own pencil in preparation for scratching through the list price of your models. You convince yourself that it’s a strategic move if you want to sell more homes.
Problem is that their pencils are sharper than yours. Buyers can always counter with a lower offer and other builders can continue reducing prices ad nauseum.
Harvard’s Michael Porter says, “Cutting prices is insanity if your competition can go as low as you can.”
You can’t win the price war if that’s your only strategy for selling homes. So what should you do?
Get the lead out. It’s an expression that originated in William Jenkyn’s “Reformations Remora” published in 1646. He wrote, “Shall our reformation have a heel of lead?”
Stop being weighed down by heels of lead and take action. Move it! Justify your home’s value instead of defending its price. Walk buyers through the model and demonstrate what makes your homes different from your competition. The fancy name is “differential differentiation;” but it’s simply you saying to your buyer, “Look. This is what separates us from whomever you’re comparing us to. This is why my homes are a better value.”
You see, value isn’t about price. It about perception. And that has nothing to do with who has the sharpest pencil.