Many contractors have more work than they can handle right now and that’s a great place to be. If you’re pricing your work right, you should be doing well. If you’re worried your price isn’t low enough to please your clients, that’s another story.
We received this note:
“Michael, I’m not a seasoned remodeler but I love doing it and refuse to go back to riding the book of insecurity. . . How do you hold a positive frame of mind when you’re constantly made to feel unworthy of a decent living by your customers, attacking your already low prices? I have tendonitis, carpal tunnel, cartilage deterioration in both knees, a bad back, and I still bust my a** pouring sweat and blood into every job.”
He’s not alone. Construction is a tough business, dealing with clients who don’t realize what we’re worth, while our bodies take a beating to make their homes better.
“How do you hold a positive frame of mind when you’re constantly made to feel unworthy of a decent living by your customers, attacking your already low prices?”
Never forget that you’re the one who sets the price. If you think your prices are too low, you’re probably right. Raise your prices. I’ve said many times in my classes that every person in the room could raise their prices at least ten percent or more and it wouldn’t affect their sales to leads ratio one bit.
When you know what price you need for a project (namely, the price that covers your job costs, pays your overhead and gives you a reasonable profit), you can be confident it’s the right price. When it’s the right price, it doesn’t really matter what the customer thinks; if they want to pay less, they can find someone else to get the job done.
There are more people today than there were ten years ago, more homes that need work, and fewer contractors. Why are you worried about the price?
Stop believing that you have to be the lowest-price contractor and start focusing on the value you offer. Learn to sell your value, not your price. When you realize your value and your clients recognize that value, you’ll both know you’re worth the price because of what you provide.
I’m not talking about gouging your clients. The right price is what you need to cover your job costs, all your overhead expenses, and make a reasonable profit. Trust me, adding 10 and 10 to your job costs isn’t enough. Calculate the markup your business needs and use it. We have more on how to calculate your right price here.
Of course, not all clients will want to pay for value, which is why you’ll probably also have to change the clients you see.
Do that by changing your advertising. If you advertise free estimates, you’ll attract clients who shop for the lowest price. Instead spend time identifying your ideal client. Where do they live, what do they do? What kind of buildings, what kind of projects? Your ideal customer will know what they want and they’ll understand they must spend money if they want a good job done by a reputable contractor. They’ll be reasonable to work with, they’ll respect you as a business owner and they’ll let you do your job. Most importantly, your ideal customer won’t try to figure out ways to cut your price or screw you out of the money you’re due for the work you’ve done. When you know who your ideal client is, start advertising with them in mind.
“I have tendonitis, carpal tunnel, cartilage deterioration in both knees, a bad back, and I still bust my a** pouring sweat and blood into every job.”
We also need to talk about the physical aches and pains, another problem many contractors can relate to. Trust me, it won’t get better. Over the years I’ve had surgeries on my back, knees, and ankle. I’ve had numerous steroid shots in my hands and shoulders to relieve severe pain. While teaching a class once, I raised my arm to point at something and experienced sudden shoulder pain that required me to keep my hand in my pocket until it subsided. On an outing with the family, I pulled off my sweatshirt and something cracked in my right elbow, causing pain for the next few days.
Our bodies take a beating, and you won’t be able to do it forever. If you’re getting older and your body is starting to wear out, or if you’re young and want to prevent too much damage, then it’s time to look at alternative ways of conducting business. Hire subs or employees to get your jobs built so you can put down the hammer and supervise instead.
Another alternative is to close shop and hire out to another contractor looking for a job superintendent; we discuss this briefly in Chapter 4 of the book Markup and Profit Revisited. Only do this if you’re going to be honest about it. Too often, former contractors use their job in a new company to find clients so they can do work on the side. If you’re good at your work and honest in your dealings, your employer will love you forever. If you’re not honest, you only have yourself to blame when they fire you and you’re out working on the jobs again.
Construction is a great career, but because of the physical demands you can’t work on the jobs forever. Once you’re in your mid-thirties, you should have all the on-the-job experience you need to supervise the jobs you sell. That’s when you should be running your company rather than hammering nails. When you do that, your company will be more profitable and you’ll be better able to take care of your family.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.
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