I hear some interesting stories from our coaching clients.
One of them told me recently about a client who is quite affluent and apparently has been taken advantage of by several contractors over the years. The client is now “fighting back”, trying to recoup the money he wasted on those contractors who give the rest of us a bad name.
They are in the middle of a remodel, and the client asked for a quote on another project. Fortunately, this contractor runs his business like a business. He charges a fair price, keeps his jobs clean, and is the type of contractor that many homeowners would love to have work on their home. His client said to him, “Well, you are getting more work now so you should be able to give us a discount because of more work.”
How do you handle something like this? Gang, construction is a cost-based business. The price of every job is based on the cost of the job, and each job must stand alone. There is no such thing as a volume discount in construction unless you want to go broke and out of business. You’re selling a custom project that doesn’t yet exist, you aren’t selling cars or cans of soup. We talk about that subject in depth in our new book, Markup & Profit Revisited.
This might be the last job our contractor does for this client, but if so it’ll be because he’s drawn a line in the sand. If he caves and gives a discount, the demand for lower prices and free change orders will continue. Once you’ve established that your prices are negotiable, you’ll be continually negotiating. It’s better to say no once than have to deal with the knots in your tummy from giving your work away on every job you do for that client.