Charlotte Property Management Weekly: Big Bank Lessons: How to Sell More by Charging More- It’s All in the Ask

It’s not how much you charge, but how you ask.

“Even in this ‘new economy’?  Everyone is so price conscious!”

A friend of mine was going to Mexico and I wanted to surprise her by giving her some Mexican pesos for the trip.  Being that Charlotte (drum roll, please) is the 2^nd largest banking city in the country, I didn’t think it would be a big deal; I only planned on getting 20 dollars worth of pesos.

I walked into Wachovia across the street and asked for the twenty dollars worth of pesos.  They said there was a $15 fee, so it probably wouldn’t be worth getting it from them.  They suggested the airport, a travel agency, or Bank of America.  I found it interesting that they suggested a competitor; good for them!

I walked a few blocks to Bank of America and figured I’d cut through the chase.  I immediately asked the bank teller what they charged for exchanging dollars for pesos.  She said they didn’t charge anything; the conversion cost was factored into the exchange rate (aka lowering it).  That sounded swell to me.

The question is: how much money did Bank of America make on this transaction?  I really have no idea.  But they got the sale!  The real exchange rate could have been 20 pesos to the dollar, and they gave me an exchange rate of 10 to the dollar.  That’s robbery (of course), but I didn’t know it.  I just knew I wasn’t paying a $15 conversion fee on top of the $20 of pesos!

So I thought about this in the context of a la carte real estate pricing, specifically in property management.  When I tell a customer that our fee for power washing their house is a 15% “project management fee” on top of the real cost, it does not come off very smoothly.  The customer feels the exact amount of our fee and how it is increasing their total cost.  There is always a strange pause after this pricing explanation, but I thought it was worth it as it provided a high level of transparency on how and where we make our money.

However, can a case be made to present this differently?  If power washing costs us $70, and we tell the customer it will cost them $100 to do it, that’s not dishonest.  I mean, do you e-mail the Gap and ask them what the actual price the shirt you bought from them cost?  Or ask McDonald’s what your soda actually cost?  Of course not!  You either like the price and buy the product, or you don’t, and you walk.

That conversation with no added fees goes a lot smoother.  I mean, what sounds better: $100 cost with no “hidden fees” or $70 plus a 15% fee?  Surprisingly, the $100!  The profit margin of the first presentation method (which sounds better) is approximately 66% more!  And the customers are happier and not triple-checking their monthly statement to make sure the 15% was computed correctly.

In conclusion, the way pricing is offered is important.  It’s a way to have your cake and eat it too, a true win-win-win.  You can charge more, while selling more, while making your customers happier!   

There might be a reason that big banks generate so much revenue; they know how to ask their customers for it!

Brett Furniss is the President & Owner of BDF Realty (“Charlotte’s Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New Solution to Sell Your Home”) which  specialize in rent-to-own (lease options) and rent-to-sell homes.  His newest book, A Real Estate Agent’s Complete Guide to Representing Rent-To-Own (Lease Option) Tenants (Delight Clients, Fill Vacant Homes, and Earn $2,250* Upfront! (*Minimum!)