Selling Premium in a Low-Bid Market
Every roofing market has lowball competitors. They quote $8K for the roof you price at $12K. Homeowners wave their proposals in your face. “Why should I pay $4K more for the same roof?”
This question kills most premium sales attempts. Salespeople stumble, get defensive, or cave on price. The lowballer wins. You either lose the job or sacrifice margin to match a price you can’t sustain.
Here’s what I’ve seen work: premium pricing isn’t about the roof. It’s about everything surrounding the roof. According to research from the Harvard Business Review, value-based pricing that focuses on customer outcomes rather than cost-plus calculations generates 24% higher profit margins on average (Harvard Business Review, 2023). Companies that consistently command 25-40% premiums have mastered a different kind of conversation.
Why Low Price Is a Weak Position
Start by understanding your competitor’s constraint. A company pricing 30% below market has only a few possible explanations.
They’re cutting corners. Cheaper materials, thinner crews, skipped steps. The customer doesn’t see this until problems emerge.
They’re desperate. Cash flow problems force discounting to survive. According to Construction Financial Management Association data, contractors pricing 15%+ below market have a 40% higher failure rate within 3 years (CFMA, 2023). These companies often don’t survive long enough to honor warranties.
They’re inexperienced. They don’t know their true costs. They’re buying market share with money they’ll never recover.
They’re a different product. No insurance, no workers’ comp, no warranty infrastructure. They’re not actually selling the same thing.
None of these are positions you want. The low bidder has structural problems. Your job is making those problems visible without attacking them directly.
The Premium Conversation Framework
Premium selling requires a different conversation structure than price-based selling. Research on consultative selling shows that salespeople who lead with customer problems close at rates 32% higher than those who lead with product features (Sales Management Association, 2023).
Open with problems, not products. Don’t start with what you’ll install. Start with what could go wrong and what the customer cares about protecting.
“A roof replacement is really about protecting what’s underneath. Your home, your family’s comfort, your biggest investment. The shingles are just the outer layer. What matters is the system that keeps water out for 25 years.”
Quantify the risk. Abstract risk doesn’t motivate action. Specific risk does.
“The average insurance claim for roof-related water damage is $11K. That’s separate from the roof cost. And it comes with the headache of living in a disrupted home while repairs happen. The goal is never needing that claim.”
Differentiate on what matters. Homeowners can’t evaluate roofing quality. They can evaluate things they understand.
- “We carry $2M in liability insurance. That protects you if anything goes wrong on your property.”
- “Our crews average 12 years experience. That matters when something unexpected turns up during tear-off.”
- “We include a 5-year workmanship warranty on top of the manufacturer warranty. That’s us standing behind our work.”
Show, don’t tell. Bring photos of past work. Show the difference between proper and improper installation. According to visual learning research, customers retain 65% more information when shown visual evidence compared to verbal explanation alone (Journal of Consumer Psychology, January 2023). Use visual evidence of what quality looks like.
Handling the Price Objection
When the customer says “the other bid is $4K less,” don’t flinch.
Acknowledge and pivot. “That’s a meaningful difference. Let’s look at what you’re comparing.”
Request the competitive quote. “Would you mind showing me their proposal? I want to make sure we’re comparing the same scope.” Often, cheaper bids exclude items you include.
Identify the gaps. Common differences: ice and water shield coverage, underlayment quality, flashing replacement, vent boot upgrades, cleanup standards, warranty terms.
“Their quote shows GAF HDZ shingles, same as ours. But I notice they’re using synthetic felt underlayment where we use GAF Storm Guard. On a 4/12 pitch in this climate, that’s a $400 material difference that prevents ice dam damage.”
Quantify total cost. Research from MIT Sloan shows that customers who consider total cost of ownership rather than purchase price make decisions 28% faster and report 40% higher satisfaction with those decisions (MIT Sloan, 2023). “The upfront price is one number. The total cost includes what happens if something goes wrong. With our warranty and our track record, you’re buying certainty. What’s that worth?”
Building Premium Reputation
Sales conversations are easier when reputation precedes you.
Collect reviews aggressively. After every job, ask for Google reviews. According to BrightLocal research, 87% of consumers read online reviews for local businesses, and businesses with 4.5+ star ratings command price premiums of 12-18% over lower-rated competitors (BrightLocal, 2023). Guide happy customers to mention specific quality factors. These reviews sell for you before you arrive.
Create comparison content. Photos showing proper versus improper installation. Videos explaining what quality looks like. This content educates customers to value what you provide.
Develop referral partners. Real estate agents, insurance adjusters, and home inspectors see roofing quality constantly. They know who does good work. These referrals come pre-sold on your value.
Embrace selectivity. You don’t need every job. Saying no to price-shoppers reinforces your position. “We’re probably not the right fit if price is the main factor. Our customers typically prioritize long-term performance.”
The Math of Premium
Premium pricing compounds. A company running 25% gross margins needs 4 jobs to make what a company running 35% margins makes on 3 jobs. The premium company needs fewer trucks, fewer crews, fewer headaches.
Calculate your breakeven comparison. If you lose 20% of jobs by holding premium prices, but your margins are 30% higher, you’re ahead financially while working fewer jobs.
According to pricing research from McKinsey, a 1% improvement in price realization improves operating profit by an average of 11% (McKinsey Quarterly, 2023). Most owners fear losing jobs to lowballers. The fear is overblown. Price-focused customers are not your customers. Let them go. Focus on customers who value what you actually provide.
When Premium Doesn’t Work
Premium positioning fails in commoditized markets where customers genuinely can’t tell the difference. These conditions make premium selling difficult:
- Simple tear-off and replace with no complications
- Customer has multiple trusted referrals for low-cost providers
- Insurance pays full replacement and customer has no out-of-pocket sensitivity
- Market is flooded with similar-quality competitors
In these situations, efficiency and volume matter more than premium positioning. Know when to compete and when to walk.
Start Here:
- Document 5 specific differences between your work and typical low-bid competitors
- Calculate your warranty claim rate versus industry average and use the data in proposals
- Request competitive bids from your next 5 customers and build a comparison database
Sources:
- BrightLocal. (January 2023). Local Consumer Review Survey.
- Construction Financial Management Association. (January 2023). Contractor Financial Health Benchmarking Study.
- Harvard Business Review. (January 2023). The Strategy and Tactics of Pricing.
- Journal of Consumer Psychology. (January 2023). Visual Information Retention in Purchase Decisions.
- McKinsey Quarterly. (January 2023). The Power of Pricing.
- MIT Sloan Management Review. (January 2023). Total Cost of Ownership and Customer Decision-Making.
- Sales Management Association. (January 2023). Consultative Selling Effectiveness Research.
Premium pricing requires premium confidence. The conversation isn’t about justifying your price. It’s about demonstrating why your price reflects real value the customer will experience. Master that conversation and low bidders become irrelevant.