Why you should charge more
It sounds obvious and it sort of it is – if you charge more with bigger margins, there’s more left over at the end of the job or the end of the year. That’s pretty nice, right?
And I know that right now you’re thinking “Very nice Jon, but it’s not that easy.” And I know it’s not. (If it was easy, I wouldn’t have this job and you wouldn’t be watching this video).
But it’s not impossible either.
This video is about why you should charge more. The next is about how price is not really the main thing here and the third one, I’ll talk about how it helps you charge more of your business and run it well.
These are all pieces of the pie and they’ll help you resist the temptation to focus on price and discounting.
So why (apart from the obvious) should you charge more?
It’s what about what other people are really charging rather than what you think they’re charging.
They are probably not charging less than you. And you probably don’t really know, so you’re probably not charging enough just because you’re scared of charging too much.
Does that make sense?
There’s the second reason, when you set your prices and your rates (your hourly rate and your margin or materials or other tradies) you pick a number that feels reasonable don’t you? But people often forget the wide costs that eat into your margins. Like – the people in your business you can’t charge out:
- Admin person
- Business coach
- You the boss
- The bookkeeper
It’s difficult to charge someone out for all of every week – but you have to pay them for all every week. Even if they are subcontractors, I bet if you went back and checked the hours you pay them and the hours you charge them out, there’d be a gap.
That is eating into your margins and is kind of inevitable.
And that’s before you think of wasted materials, defects that you have to go back and fix, every mistake and every overrun cost that eats into your margins. All that stuff needs to be paid for and the only place it comes from is in your margin. And if they are not fat enough then you’re in trouble.