I’ve heard that more times than I can count. Let me share a snippet from a note that came in a few weeks ago:
“We have a very competitive market here and want to make sure we are not pricing ourselves out of the market. My husband and I both agree a lot of our problem is not charging enough for our work. We have an excellent reputation in the area and great reviews but at the same time it seems to be all about the price . . . .”
Every market is a “very competitive market”. Every one, no exception, it doesn’t matter where you live. Do you need to spend time worrying about that competitive market? No, you don’t.
When you worry about the competitive market, you start worrying about price. Then you start setting the goal of being low bidder, because that’s what everyone means when they say it’s a competitive market, right? It’s all about being the lowest price.
How about being competitive by being the contractor who shows they can do the best job of providing the potential client what they want?
You do that by first finding out what the potential client wants done. You then find out when they want to do the job and who will make the buying decision. Then, you let them set their own budget for the work to be done. If it’s realistic, you then move them toward a design agreement, and get that commitment for your involvement. If their budget isn’t realistic, you’ll educate them on what would be a realistic price for their job, providing ranges depending on their design choices. If they agree, you move ahead with a design agreement.
If the client is looking for the lowest price for their work, you’ll find out. And when you find out they won’t be willing to pay a fair price for your services, you have a choice to make. You can sell the project for less than a fair price, which means you won’t be able to make a reasonable profit, or you can walk away and look for clients who are looking for a contractor who will build the job they want done. Because you and I both know that when a client buys the lowest price, they seldom get the results they wanted.
Folks, when you have a good reputation, it’s a lot easier to find clients willing to pay a fair price for the work you do. Unless your reputation is that you build great jobs for cheap. If that’s the case, you’ll have to either re-educate your clients, or go out of business.
All clients want you to lower your price. That’s normal. You want to buy groceries for less as well, but how often does your grocer lower their prices when you walk through the door of their market? The grocer is not going to lower their prices and you’ll pay the prices he charges. Your clients are no different; you simply need to learn how to present your services the same way the grocer uses to get you to pay for his stuff at his prices. Learn to sell your value, not your price.
As the late Zig Ziglar said, “If you’re in something, get in it. If not, then get out.” Quit fussing and worrying about your price. Charge a fair price* for your work and go sell something.
*Fair price: The price that allows you to cover all your job costs, your overhead expenses, and make a reasonable profit. No more, no less. Markup & Profit; A Contractor’s Guide Revisited.