Water Softener Price Differences "How can they charge so much?"

When I started writing these articles a few weeks ago, I resolved to myself that I would not write about other companies and their sales methods. But because I get my subject ideas from the daily phone calls that I take, I am forced to deal with this issue. So let's get it out of the way today.

Overhead Costs

Door-to-door salesmen, commissions, taxes, advertising, phone solicitation, postage, salaries and monthly office expenses really drive up the cost of doing business. When a product (anything) is purchased by a consumer from a company that advertises and has a sales staff, the cost of those expenses are covered by the price of the product. This means that when the consumer responds to the card in the mail, or the ad in the paper, or the call on the phone, there is already a pretty hefty investment by the sales company in marketing the product you are concidering.

That is especially true with water treatment equipment. Water softeners, reverse osmosis systems and whole-house filters are not all that expensive until you factor in the cost of getting the consumer to purchase them.

Sales Methods

While learning about the water treatment industry, I had the unique opportunity to sit in on a few sales meetings held by a very large national water treatment company. The topics of discussion included sales methods, how to deal with negative customers and pricing among other items.

What really opened my eyes during these meetings was the way this company would try to justify charging up to $3500 for a basic water softener. They would of course claim that their control valves and tanks were superior to anything you can buy, but they would also claim that the media they sold was far more efficient and over all better than anything else available. They used a brand of resin which is no more expensive or efficient than any other softener media out there. They would also mix a certain amount of activated carbon in with their media to claim that their softener also acted as a carbon filter without the added expense of purchasing a seperate carbon filter.

There are four basic problems with the methods these guys were employing. First, the control valves and tanks that they were using were no different than the ones available from factory reps on any water treatment website. Second, the cost was still way too high even if their claims were true. Third, the resin media they were using was a name-brand product available at any water treatment company or web site I have ever visited. And finally, while mixing carbon in with softener media seems to be more and more popular, the carbon will become inactive after the second or third month. What are they thinking?

It seems that this company and others like them are striving to make their product appear different from the same product available everywhere else, thus justifying the higher cost.

Commission

In reality, they are simply trying to entice their sales force into setting up "free water tests" and spending up to 3 hours talking the homeowner into buying their systems. A typical "door-to-door" sale works like this: The franchise gets a percentage of the sale, the owner of the business gets the largest percentage and the salesperson gets around $800 for his troubles. And about $200 goes to the installer. The rest of the money goes to the other expenses mentioned above and of course to pay for the equipment.

 

Rip Off?

Are these people trying to rip you off? I am sure that they do not see it that way. If a salesperson only makes one or two sales per month, that's not a very good income for him. On the other hand, if they can score 4 or more sales per week, that becomes a serious amount of money. Four sales per week would be very difficult but there are people out there that do it. And whom do you think stands to profit the most on these sales? The business owner. While he may have many monthly bills to pay, only two or three sales would cover them. The rest would be all his. With a modest sales staff of 6, the potential is there for at least 12 sales per month.

It seems it would be more profitable to sell these systems at a much lower rate. That way more people would be willing to buy them and there would be a higher volume of sales. Unfortunatley, some people do not see it that way.