If you ever price shop to base your prices on your competitor’s prices, stop it right now! (I’m shaking my finger at you while I write this.) The way to thrive in the contracting business is not to focus on being the
cheapest, but instead being the
best value.
What do you do that is better, different, faster, more convenient and higher in value than your competitors? To find out, build a list. Then flaunt it to your customers through the media.
I critique many ads that fail to mention guarantees, extended service hours, warranties, flat-rate, or other brag-worthy assets. My question:
Why have ads if they don’t build your value to customers? The point is this: If you want out of the price war, refuse to participate. Raise your value, then your prices, and thereby increase your sales dollars - while reducing your headaches. Once you’ve done that, you can step off the treadmill of reverse auctions where the cheapest bid wins.
Permission granted to price for profit Now, some of you probably feel that your customers won’t appreciate or understand a price increase. If so, please know that the only cure for this self-imposed guilt trip is to realize it is NOT illegal or immoral to distinguish yourself from your competition in ways other than what color truck you drive.
Hey, you all buy similar equipment for similar prices from similar sources. Don’t bore me, or your customers, with why your brand is superior right now. Your customers don’t care… yet.
What they do care about is getting their problem solved. “Fix me!” is their collective cry. If you THINK your customers will say, “Fix me at the cheapest price possible or else,” then you have my permission to let them go “elsewhere,” to a kid with two left hands, a rusty pair of channel-locks, and a job ticket written on a fast-food napkin.
Distinguish yourself by a higher degree of value and benefit. Faster service, more service, longer service, better guarantees, etc. These set you beyond the crowd and therefore you deserve more dollars.
If you’re running a quality shop, with technicians who are skilled and have ethics, you’re already
worth more than the rest of the crowd. So why not charge for it?
Price your jobs for profit. Your ideal retail replacement margins should be 50-55% gross. For service, the sky is the limit. You’ve been to the seminars and bought the flat-rate software. You know what your industry is charging, and now you need to ask yourself if you’re worth it. You can honestly answer “yes” if you have ever…
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Saved anyone from a near disaster such as a minor plumbing leak that had flood written all over it.
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Saved anyone from a furnace fire hazard.
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Spotted and corrected a carbon monoxide leak.
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Talked anyone out of a replacement because the repair was better suited for them.
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Suggested a replacement because it saved money, time, and trouble in the long run.
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Did a little “free extra” for a customer who needed it more than you needed the money.
If you’ve done any of these things, you’ve shown integrity, and respect. If that’s not worth more than your current paycheck, I don’t know what is.
If I haven’t yet convinced you, think of it this way. Your attorney charges $200 an hour. Your accountant is at $125. How many fires have they spotted? How many water-ruined homes? How many CO poisonings? Not many I’d guess.
Don’t keep your prices low to simply fit in with the competition. Your mission is to give a value to your customers. That’s all that matters.
Adams Hudsonis president of Hudson, Ink, a creative marketing firm for contractors. Readers can call Hudson, Ink at 1-800-489-9099 to ask about our summer customer retention postcards or go to www.hudsonink.com. To receive a free marketing newsletter, fax the request on your letterhead to 334-262-1115 or visit www.hudsonink.com for other free marketing articles and reports.