News & Research Archive

Know what it Costs

Feb 20, 2012

 

It is astonishing to me the number of salespeople who sell products and services everyday without knowledge of what the original product costs and how it applies to the price of what they are selling. Without knowing costs and how they eventually determine the sale price to the buyer, it would be hard for any salesperson to properly sell to a potential buyer.

Take car salespeople for instance. More times than I can count, I have walked in a car showroom and been unable to find one salesperson that knew the price of the car or the cost of accessories without looking at the sticker. With half a dozen cars on the showroom floor it cannot be too difficult to take the time to completely understand the costs associated with each car on that floor. Basic product knowledge is essential for a salesperson in order for them to have an immediate conversation of the amenities offered for their particular how it applies to the sticker price.

In my business of commercial real estate, it is astounding how most brokers know so little about the costs associated with a tenant build-out; even though build-out costs have a direct effect on the rent that their prospective tenant will pay. Often times, brokers will ask a landlord for an allowance so that their client may make building improvements; but more often than not, brokers have no clue whether that allowance is even close to covering their client's needs or the cost of overages if the allowance didn't cover the necessary work.

Recently I received an offer from an experienced broker with a rental rate for a one-year term and a request for the landlord to pay for new paint and carpet for the premises. He asked for a fee of $1.50 a foot and offered a rental rate of $2.00 a foot below the asking rate. The landlord was expecting a three to five year lease and after doing the math, the landlord would have lost money on the deal. When I asked the broker why he would make such an offer he said that it was customary to ask for paint and carpet at a minimum. He did not do the math, his client did not get the deal and in the end he did not make a sale.

Experienced salespeople know their costs, allowing them to position their products and services to meet the needs of their clients. This kind of product knowledge will only help to better serve the salesperson's cause and allow for a smoother running of business.

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Written by: Hans Hansson

E-mail: hans@starboardnet.com


Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 27 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email hans@starboardnet.com or call him at (415) 765-6897. You may also check out his website, http://www.commercialspacefinder.com/.

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