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Why price is not the main thing
A true story.
Jim put his price up by considerable amount and no one even blinked.
I’m trying to persuade you (of course) that you can put your price up and you won’t go broke. You can still win jobs and you won’t end up on the streets with not being able to pay out your wages. I think it’s important and it’s possible and I think you should be trying it.
I’ve talked and written about how you compare to others and how it’s good to get your head around whether you’re too cheap or not. I’ve talked about how you need margins to look after your business and if you don’t have them fat enough, things go about a bit crap and awful.
I’ve said it’s about having confidence and I stand by that. If you’re confident, it’s easier to put your price up.
If you’re not confident, it’s terrifying isn’t it?
You’ve got to pull up your margins and you better not blink.
So here’s a story about my client Jim.
I have been coaching him for couple of months. He runs a successful building company. They do great work. They’re proud of the work they do and they run multiple jobs at once. They’re turning over a few million dollars and he was charging about $50 an hour with a 10% margin. We agreed that we thought that was too thin and too small. We’ve put the price up to $55 an hour with a 20% margin and they just secured $650,000 worth of projects at the new rate almost instantly, after three to four weeks. And guess what…The client (the developer) didn’t even blink.
I’m telling you it’s not just about the money.
Jim now has an extra $60,000 to $100,000 in additional bottom line margin from that project just because they put their price up. And because their customer still thought it was fair.
So I’m telling you, you can!
This was a hefty job, it was probably terrifying for him but you can do it. The customer didn’t seem to mind because it’s not just about the money.
Other things are important when you’re working with your customers – whether they’re developers or whether they’re homeowners or whether they’re other builders or other tradies.
The money is important but the risk is important. People have a lot riding on the project, the developer has a lot riding on the success of this project.
If a project goes wrong you would be in a tight spot. It’s a big expense for builders like you. So it’s not just price, risk is important too. If you point out to these people how you can make their project less risky, price become less of a factor.
I go into more detail about in the workshop I run. Book by pressing that button down and I’ll see you up here in Byron to dig a bit more deeply into this.
There are four ways you can engage with me:
1. Subscribe to these emails and get them once a week in your inbox so you never miss a video from me.
2. Join the Trades Business Toolshed Facebook Group where you can watch these videos, ask me questions or talk to your peers.
3. Attend my next Tools Down workshop.
4. Book yourself a 10-minute chat with me. We’ll talk about whether coaching is right for you now and if it is, we’ll go further into the process before you have to make your mind up.
See you later.