I browse the net and read all I can find on construction related topics. I attend conventions, both as a participant and as a speaker. There is good information available about construction. Unfortunately there is some not-so-good stuff available, also.

I think the issue that bothers me more than any other is the nonsense from “industry experts” declaring that we must be competitive.

You do not have to be COMPETITIVE. What you have to be, what you must be, is PROFITABLE. If you are not profitable, you and your business are going to go away. Period, end of conversation.

There are a few speakers and writers who understand the concept of being competitive, but they are few and far between. Most experts focus on price.

In today’s market, there are a lot of little things that matter more than price. Some of those little things are returning phone calls, dressing properly, haircut and shoes shined, keeping your appointments and on time, providing solid answers to the customer’s questions.

Bigger things matter, too. They include following through on what you say, starting and finishing jobs on time, communicating clearly and frequently with your customer, keeping jobs clean from start to finish. These details are included in all of our Markup & Profit products.

Your customers rank price 7th or 8th in their list of considerations when they select the company that will do their remodeling work, new home, or specialty service work. That has been shown by a number of different studies, including one by the National Association of Home Builders.

Let me give you an example of how powerful intangibles are in this business. I am currently working with a small specialty company in our local area. The company provides air duct cleaning service to residential and light commercial customers. We do all of the above, religiously. Do we try to be competitive in our bidding? Not on your life. Our price per opening (grill or register) is anywhere from 1.5 to 2.5 times higher than any other business of our type in the entire metropolitan area. And yes, we do check our competition’s prices regularly.

As I write this article, we are closing better than one out of every two sales calls (almost 60%). The major difference between what we do and what our competitors are doing are the intangibles. There are only so many ways to take dust, dirt, and other debris out of an air duct or a furnace.

So, the next time you start worrying about your price being too high, or that you must be competitive, remember, it is in your head, not your customers. They don’t know if your price is too high or not. If they did, they wouldn’t have called you in the first place. They would have done the job themselves. Polish up your sales skills, stay on top of the intangibles, and forget about being price competitive. Let the other guy be competitive and go broke. Focus on being profitable and focus on doing the intangibles.

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Bering Star
Bering Star
December 22, 2013 6:44 pm

Michael. This little article speaks to me very strongly. I am in my first year of business after breaking away from a large company. We are owner operated and our product offering is of the highest quality due to our structure and personnel. I price our work in a profitable way, and have sold some jobs with this pricing method, but not enough. How does what you are saying here come into play when the client is getting more than one bid? Often, I am selling against salesman who will throw just about any number they have to out there… Read more »

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