Building Materials Pricing & Value Strategies

More About This Show

The Smarter Building Materials Marketing podcast helps industry professionals find better ways to grow leads, sales and outperform the competition. It’s designed to give insight on how to create a results-driven digital marketing strategy for companies of any size.

In this episode, Zach and Beth talk to Carolina Albano about how pricing needs to be integrated with your value strategy or else you risk being just another loser on the race to the bottom.

Pricing is a really hot topic because it communicates a lot of different things to your audience. It can speak of exclusivity, but it can also indicate when your brand is completely out of touch. Pricing things effectively or correctly is a balancing act, and there's a lot of psychology behind it.

Carolina Albano is an entrepreneur, engineer and the Commercial Sales Resource in LA for Fireclay Tile. She credits this variety of experience in giving her a view of sales and pricing that many people in the building product industry never get access to.

For Carolina, pricing begins with the ideal client. Who are you making your product for? As a manufacturer or as a business owner, you get to decide who you want to serve. And once you know who you want to serve and they tell you what they want, then you give it to them.

Anyone who has worked in sales has run into a customer who balks at a price point. But most often this is because they don’t fully understand the benefits of the product or because they’re being sold benefits that don’t meet their needs.

Quantification is key. If you're going to tell somebody you're going to save them time, you have to tell them how much time. If you're going to tell them you're going to save them money, tell them how much money.

Not only do salespeople need to know their competition, but they also need to know the details of the components attached and associated with the products they’re selling. Only by understanding how all the components fit together, and what steps can be shortened or eliminated with your product, can you actually quantify how much time or money a customer will save.

Many companies use anchor pricing to help direct a customer towards a preferred product. The simplest example is developing three product grades, where the base model is the least expensive, the third-tier model is priced the highest with extra features, and the middle-grade product is the one most commonly purchased because it meets the most common customer needs.

A creative version of this is something Carolina sees in companies selling to both the commercial and residential markets. For almost all products, residential products are priced higher than commercial ones. So some salespeople will use that residential pricing as a top tier to drive commercial customers to the intended mid-tier commercial product.

Common wisdom says, in sales, you never start with price. Salespeople have to properly convey the value they’re bringing, which often means showing the product and its advantages before the customer is ready to get down to numbers.

But the numbers aren’t always that simple. The consumer is now more educated than ever. They can look into your company and determine your spending priorities, how much you give back to the community, what your manufacturing locations and practices are. Pricing isn’t just cost plus margin anymore.

We should stop swimming in a red ocean or operating as a "me too" kind of a company. Manufacturers are all trying to make the products as lean as possible, while still making the best product they can.

If you can show you're the best product in a niche area, then, in essence, you can price it however you want. If you bring that product to the right client at the right time, they're going to buy.

At Fireclay Tile, Carolina and her colleagues publish all their residential pricing on the website and in their catalogs. It gives them that anchor pricing advantage when it comes to their commercial products. But that transparency also lets them tell the consumer more about their brand.

Fireclay Tile has its B Corp Certification, which means its manufacturing practices are lean, clean and responsible. They give back to their employees; they put people and planet before profit. Being able to tell this story helps their customers contextualize and understand what they’re buying, and why it’s more than cost plus margin.

In many circumstances, pricing transparency can increase your competitive advantage. With consumers, including architects and designers, who are used to having more and more information at their fingertips, they may expect pricing information upfront. With more customers doing their own research before they ever meet with sales, transparency may give you the step up you need over the competition.

It’s tempting to base pricing strategy on what the competition is doing. If their prices go down, yours have to too, right? Without proper product differentiation, pricing becomes a race to the bottom and that’s a race where nobody wins. Even with commodity products, differentiation is key to making a manufacturer master of their own pricing destiny.

Carolina has seen this phenomenon not just with manufacturers, but with installers too. If installers bidding jobs without doing proper takeoffs, without talking to the manufacturer and understanding what it's going to take to do a project, then bidding a job low just to win it becomes another race to the bottom.

Manufacturers need to educate installers and general contractors and make them feel comfortable knowing and installing a product. Without that education, every product looks the same, and GCs and installers will always choose the less expensive option. To get on the spec, education needs to happen at three levels: the installer, the contractor, and the architect or designer.

Got a Question?

Join Carolina and her co-host, Tim Seims of Nichiha, on the Build Perspectives podcast. Or connect with Carolina on LinkedIn.

And if you have questions about how to integrate your price and value strategies, let us know! Shoot us an email at podcast@venveo.com with all of your questions.