Brian Tracy publishes a regular newsletter and sometimes he says something I really appreciate. Recently, he said (emphasis by me):
The key to a successful business is to add value by bringing the product or service from another place to where you’re selling it, or by creating the product or service and selling it at a price higher than your total cost of production. You become wealthy by either selling a few products or services at high prices, or by selling many products or services at lower prices with smaller profits.
If you are tired of starving because you have enough work but don’t have the money to pay your bills, heed these words. You must sell your jobs or service at a price that covers all of your job costs, all of your overhead and an additional 8% for your profit. Anything less than that amount and you are losing money.
Notice that when he says to sell more but charge less, he is talking about selling thousands of widgets, NOT thousands of dollars of work. And you still need to make a profit – profit only happens after you pay your job costs and all of your overhead. Price your jobs right and you won’t be starving.
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The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses. He is the author of Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations. More here.
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- Can You Be Both Competitive and Profitable?
- When Your Client Sets the Price
- Pricing Too Low
- Calculating Your Markup
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