Is Your Price Too Low? Poll

marc

Your closing Over 90%

Do you think your price is too low? YES or NO

ProWallGuy

yes

You know Marc, you could've actually created a poll for this when you started the thread.

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Wallpaper Hanger St. Louis
Digital Murals Installation

john elliott

No

Not necessarily, depends on what you are selling and to who. If you have a good reputation then there's no reason at all why you shouldn't close every lead. On the other hand, if you are working from advertising such as Yellow Pages then 90% would suggest too low a price.

John

dirt diggler

i wouldn't say im too low --- but i think ive left some dollars on the table


wait, i guess that means i am too low

MattCoops

If you truly are closing over 90% and making a profit

DON'T CHANGE A DAMN THING!

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Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

marc

If you truly are closing over 90% and making a profit

DON'T CHANGE A DAMN THING!

What if you could double your price and make the same amount of money with half the effort?

mahlere

don't you throw common sense into this arguement

i've asked people for years "if you could double your prices, but you would lose 40% of your customers (assuming each customer is equal $), would you do it?"

Many say yes, too many say "no way!"

mdshunk

That question tends to imply that it's somehow wrong to be inexpensive and work hard. It's a personal decision, with no right or wrong answer. For me, the Puritain work ethic is alive and well, and I believe that I price fairly.

That said, if my tradecraft was a niche specialty, I may well close nearly all my prospects because I have little or no competition. The closing rate can sometimes have nothing to do with the price. I'm sure that the price could be raised to a point that it would start to detract from the closing ratio, becuse it would then become the main (and perhaps only) buyer objection.

To me, questions like this are goofy. Are you making a decent living? Are you content? These are the questions I ask myself. If the answers to both are 'yes', then why worry yourself with such follies.

MattCoops

again if your closing that high
don't change a damn thing

keep at it

dont get too greedy
then you're a salty salesman
and start losing business

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

maj

[/QUOTE]



Paul, is that you with a new alias?

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The views expressed in this post are merely opinions of named poster and in no way shall be deemed meaningful by members of the herd. By no means does anything posted by named poster mean a damn thing for anyone else partaking in this thread.

ProWallGuy

No, different guy all together.

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Wallpaper Hanger St. Louis
Digital Murals Installation

Dave Mac

Maj

Paul and Marc have been around these BB for years, they are differnt people, but very helpful people.

If your closing 90% Chances are you are to low. If you dont think your to low, chances are you dont know your true real numbers. imo by the way i used to be that person, (to low of price), kind of pisses me off now.

marc

Dave,

That was me also. For 13 long years. 1986 until 1999 when I snapped out of it. That's when I decided that I had never created a business. What I had created was a job. A very low paying job with a lot of hours.

Melissa

I would vote Yes. This is something that I've just learned. It's odd that it's kinda a good thing if you're not getting 100% of your sales due to price only.

paintr56

Yes !

From a profit stand point definately too low. Many people think they are making a fair proffit and can not justify in thier minds raising the price.. The truth is the market will tell you what a fair proffit is. A closing rate around 40% I have found works well for me and from what I read seems to be a good benck mark.

Jim Bunton

Frankawitz

In 21 years of doing insurance repair work I have always had a closing rate between 60% to 80%. I can average $45.00 an hour to as much as $187.50 an hour, on average I work 30 hours or less per week, when I started out I use to work 12 to 14 hours a day and that was everything from doing the job to estimating and office work, Now all that is done with in the 30 hours. I spend as much time enjoying myself, cause if you don't love what you do, I don't care how much money you make your not going to be happy, cause all you'll be thinking about is money and there is more to life and business then just the Green Backs. Have fun and enjoy what you do and you'll be fine.

painterjim

Two years ago I was closing around 60% of jobs bid. I started looking at the numbers and realized that indeed I was too low. Not that I wasn't making money, I was. At that time my profit margin was around 30%. I increased my rate by 10%, after six months I realized I was still closing very close to 60%. Although I had essentially raised my profit magin 10% by the increase, my closing rate was still too high. I raised my rates by 5%. After six months my closing rate dropped to 50%. So, although I was closing 10% less jobs I increased my profit by a little over 7%.

My closing rate now is starting to creep back up and this spring I intend to look at my numbers to determine if I need to raise rates again. If I start closing over 58% of my leads it's time to reevaluate.
I think, or hope we are all in business for the same reason, to make as much profit as possible with as little effort as possible. I don't want to do this for the next 20 years. I have a solid plan in place to retire in 7-10 years with enough to live comfortably for the rest of my life. If your'e in business you need the mindset of a businessman.
For me, owning a business is much more than earning a living, I can earn a living working for someone else with no headaches. The question should be are you earning a retirement income within your timeframe, if not, somethings wrong. Contentment can be 1st cousin to complacency, I have learned to be content with what I have, but if contentment can come with an increase in profits I would rather be on that side of the fence.

Overall I don't know how much your'e chargeing to close 90% of your leads, but I would sure take a close look at the numbers and find out if I could be closing a bit less to make a bit more profit.

john elliott

But these percentages mean nothing unless they are compared with the quality of the leads. Leads can vary from tire-kickers to people who have the money and are prepared to wait in a queue to get you

With the second type, one could still say that prices should be raised, however if the prices are raised too high then these good quality leads will be wasted as they start to feel ripped off and begin to look elsewhere.

So far I haven't seen anyone mention lead quality

John

painterjim

John,
Your'e correct. But I would say that 75% are quality leads. I guess my numbers would be somewhat skewed if one considered that 75% of their leads are poor quality leads. I calculate at a total % closed. I lump both the bad lead in with the good leads to calculate my closing ratio. My price doesn't change regardless of the lead.

In the scenario I gave earlier I have still increased my profit margin 7% by increasing my rates by 15%. So, regardless of how that happened it did happen. Have I priced myself out of some good jobs that would have yielded a 30% profit, yes, no doubt. Have I lost potential future customers in the long run by the increase...yes, probably. But, overall I have gained 7% in profit by the rate increase.

And my closing rates are ever so slightly moving upward again. You bring up a valid point. But the good quality leads are still being closed...not at the rate they were before the increase, but I'm making more money per close.

marc

A lead is a lead

My experience tells me that people don't usually call you because they are bored and really like talking to contractors.

I can picture it now...Husband talking to the wife "Honey, We have nothing to do tomorrow night. Why don't we call up a couple of contractors and tell them we are interested in Kitchen cabinets? That would be fun and could kill a couple of hours. What do you think?"

If they call you there is a pretty good chance that they are interested in your products and services. Do you close more referrals than a yellow page lead. Of course but that doesn't make the yellow page lead a tire kicker. Find a way to get them your products and services. It may be offering financing or taking credit cards. The other day I spent 40 minutes on the phone with one of our finance companies to get these people approved. You know what though...........They are MY customers because they couldn't get it from the other guys that were not offering financing. Make it easy for people to buy from you and NEVER EVER try to qualify them. When you do that the only thing that you will do is dis-qualify them.

I guess I could close 90% if I only ran referral leads. Of course I couldn't stay in business very long or I would have to lay off most of my employees and fire all my subs.