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Pricing Strategy. You am considering revisiting your pricing strategy.
Sounds like a great idea, but you need to tell us more.
You are into carpentry. WHERE?? HOW LONG HAVE YOU BEEN IN BUSINESS??
HOW LARGE A COMPANY (# OF EMPLOYEES)??
DO YOU HAVE AN ACCOUNTANT??
HOW ABOUT A BUSINESS AND MARKETING PLAN??
*The more you share, the better we can help with pricing strategy**.*
As in your business, everything we do in the sign business is custom. At times we have struggled with pricing, but are finding this year that about 75% of our bids are being accepted even with higher prices. We still have a few that want to discuss our price, but fewer and fewer. Maybe it is because we are weeding out the ones who do not appreciate the VALUE we provide. Yesterday for example, on two sales calls with repeat customers, they just wanted the work done, were not questioning price, nor did they want a quote. The third was very concerned about price, until I told them we would take care of some details their landlord had not completed while we were on site. Now there was value to them in my price.
Pricing has been heavy on my mind. With so many people offering their services at such a low rate I was beginning to think I needed to lower my rates. But a client helped me with this. He said, "never price yourself so cheaply that folks think your quality is poor or too high that they think your services are too much for them."
I decided to hold to my current pricing. I try to emphasis what they are getting for the price. It seems to be working. For me, education is helping a lot. I explain fully what we are going to do for them and what they should expect from us. I let them ask questions and I answer them with all honesty. The better they understand, the more they appreciate the level of the quality we deliver.
I was talking with a project manager who has taken up walking to get in shape. She was just singing the praise of the shoe store she went to. She bought a $100+ pair of shoes. All she could talk about was how much time they spent with her, measuring her foot, analyzing her gait and everything. She has told all of her co-workers and family about this place. I noticed that the price didn't seem to faze her or anyone else because the service was so good. I think there is a lesson for us. Or at least me.
If your company has skilled employees (and all the associated overhead), all of your costs will continue to riss in the months ahead. Therefore, I don't think you can possibly lower prices enough to bring in the amount of additional work you'd need to offset those rising costs (in most cases, if it's a $10K job and the customer can't afford it, he probably can't afford it at $8K either).
On the other hand, if you're the only skilled craftsman in your firm (your employees are less-skilled "helpers"), your overhead is probably much lower (plus rising costs will hurt less and you can control them by "tightening your belt" on some things). In this case, I think it's better to be working than not working, so I would start bidding very aggressively.
Obviously, you don't want low bids to suggest low quality or desperation, and you don't want to add extra cost to a job you've bid low by having to "dink around" with a client the way you might with a high paying custom job. So make the customer very aware when you submit the bid that the price you are offering is well below your normal rate and well below any comparable competitor. Explain that it is a real bargain (the kind they can brag to their friends about), and that you're willing to offer it now because you have the right days open to complete the work between other jobs, and you just want to keep yourself and your crew busy. Then put a "ticking clock" on the offer -- the customer either commits and you get started, or you move on (and the offer is retracted).
If three competing carpenters bid on a job in the $7K to $9K range, the customer will probably "think about it" awhile -- and if the work is not critical, nobody may get it. Yet if you (a superior carpenter to them, of course) come in with a $6.5K bid and a ticking clock, you create enormous value in the form of quality, price, and scarcity -- which can help increase the number of bids you convert to contracts, increase your revenues, and lower your marketing costs.
Hope that helps. Best wishes.
Great question in the current climate. Our experience has been to hold firm to your price, as the rich are really getting richer (unfortunately, the poor are getting poorer as well, and real lines are being drawn here).
It is a good time to emphasize the value of the work you do, as you mentioned. Work through referrals and if you have a superior product, and/or service, emphasize that through your language, presentation and all correspondances. People who can afford it, want to feel good with who they work with. We are willing to pay more for a superior product that also comes with a pleasant, fun and/or convenient experience (especially in an increasingly fast paced world with added frustration). Do not undervalue the worth of the warmth, comfort and/or confidence that you may offer to a client through your exceptional craft, communication skills and work ethic, as this combination is rare and priceless!
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As I go out on bids this year, I am finding it harder and harder to land work. People are getting more conservative with their money and also less likley to tap their home equity funds. I am considering revisiting our pricing strategy. Are others doing this? Any tips? We actually had not needed to adjust the pricing on our carpentry (other than charging more every year) in a while