Why Price Matching Makes Perfect Sense

Margins are tight and the competition is breathing down your neck. Why on earth would you offer a price-match guarantee? Because it works. Hang in there with me, and I’ll explain why.

Customers love knowing they’re getting not only a great deal, but the best deal. You see it every day with stores like Walmart and Home Depot, and it’s a key reason these stores are so wildly successful. Sure, Home Depot’s flooring department is huge, and you may argue that their buying power out trumps yours any day of the week. But, with a little creative thinking you can confidently offer a price-match guarantee and watch the sales roll in. Here are a few strategies you can start employing right away:

  • If you are part of a larger franchise or cooperative, you already have solid buying power and can likely obtain product at a competitive price. If you’re not part of a larger buying group, I’d recommend looking into it as it can drastically improve your ability to buy low.
  • Create your own private labeling system. All this requires is a label maker and retrofitting displays to create your own nomenclature.
  • Be creative with product offerings. No one says you have to sell the same products as the guy down the street. Negotiate exclusive deals with manufacturers or shop the competition to see which unique offerings are missing from the marketplace. If you’re offering something different then you are, indeed, offering a best-price product.
  • Consider taking open-line products off your shelf if the pricing is continually beaten by your competitors. Replace it with something you can price aggressively, or a product no one else is selling.

Now that you’ve got a price-match strategy in mind, how do you utilize it? Many of our clients offer the price match for a set amount of time after the sale has been completed; others offer it when the customer is still in the decision-making process. Another tactic I’ve seen used successfully is offering a percentage discount from the difference of your original quote and that of the competitor. This is similar to the 110% price match guarantee advertised by Home Depot, and is something the market is familiar with.

But how do we know it works? Glad you asked. We conducted a three-year survey of flooring business owners and found that those who offered a price-match guarantee experienced the following:

  • Were over 55% larger in volume ($4.75 million vs. $3.01 million)
  • Had a higher gross profit of 36.3% vs. 35.5%
  • RSAs each sold nearly $25,000 more per year
  • Owners took home just over $29,000 more per year

If I haven’t convinced you yet, let me leave you with one final thought. Offering a price-match guarantee sends a message to the customer that you are truly committed to excellent service and value. Imagine your sales associates saying, “We are so confident you will get the best value in town, we offer a 110% price match guarantee if you find the exact product with the same level of service and same warranties from another retailer in our market.” How could a customer possibly decline such an incredible offer? Chances are, they won’t. The best part is, it’s a proven strategy that’s relatively easy to employ. And, I guarantee your customers are going to love it.

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