So We Are Raising Prices And......

ruskent

For most of last year I was working way to cheap. Other companies may of been able to get by at those prices, but I could not with my level of quality.

Now I have done some estimates for customers who I have done work for last year. My prices are honestly double of what they were last year for alot of things. Now I know how long things will take, I know what proablems will arise, and I am no longer forgeting little things from the estimates.

I have a customer who I belive is going to call me out on the price increase tommorrow when we met. How do I respond and justify it?


Under no circumstance will I lower my price.

Matt

mahlere

justify it honestly....

not only have all our costs increased...you simply underbid some of the previous work...you honored your past pricing when it was low, but you do not need to go into the project knowing you will lose money...

Tao_Rider

Out of Sales 101....

Make sure you are confident in your price.
Never, ever apologize for your price.
Sell the benefits from the get go, and never stop.
Outline the project in excruciating detail so they understand the complexity and how you are going to get them through the details as stress free as possible.
If they whine about the price, remind them that you do x number of estimates a year, x number of jobs a year so you KNOW your price is fair.
Explain the risks of dealing with someone who comes in low.
Monitor your close rate, as long as it is better than 1 in 4, you are doing well.
Practice can make perfect, but it can make you poor if you keep doing it.

Best of luck,

Mike

john elliott

Try to think of some way in which your work, or your materials or your service or whatever is a little bit better than last year. people hate paying more for exactly the same thing as they got for less previously. Give them something that they can use as an excuse to themselves why it is ok to pay the new price.

John

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

A W Smith

tell them you can no longer remain in business with last years introductory offer pricing, You were losing money simple as that. If they want their project to have the same high level of quality you gave them in the past at some time in the future. It is necessary that you remain in business to deliver that quality.

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Al Smith
http://www.awsmith.com

Double-A

I think you answered your own question here.

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New York Times, July 20, 2006

Brock

Been there. I have a guy that has used us on about 5 jobs over the past 10 or twelve years. He always noticed our increases and now he wont use us anymore. We have developed a good relationship though over the years and we travel in the same circles so we bump into each other a lot. He calls me "easy money" every time he sees me. I consider him a good friend. He still uses newbs for his jobs because he knows he can get "good enough" work for less than half of what I would need. Every 2 years or so he and his attorney wife buy a different house and throw all kinds of money at it. Pools, decks, garage additions, etc. I don't mind missing out on the work because I have learned how to make more and work less.

KillerToiletSpider

We've raised our prices twice in the last six months, it has not affected the number of projects we are getting at all.

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silvertree

When you give someone a low price you set the bar. If they give your name out, they mention the deal (on price) that they got. "You work for a price that lets you live as you deserve". Low price and you live like a pauper, fair market price and you get to live well and grow your business. You also get to service your customers better. You and the customer get good treatment. You will lose some "sharpen your pencil clients" and thats good because you'll never make mopney with them. It may take some time but choose the kind of jobs you want and the type of customers you need and they will both begin to come along.

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Kitchen, bath, St Paul remodeling
Minneapolis Remodel Blog
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Vinny

Rusk, you've done the right thing and please dont have remorse over it. Take what everyone else has said here and believe it because its true and they are right.

The fact is unless your in an area of florida that is like a depression, work will still be bought and sold. Some of that work will be sold for the high end prices, some will be sold at middle of the road prices and quite a bit will be sold at low prices.

You have a responsibility to yourself, your family, your employees and your clients to be prosperous and profitable so you need to get a piece of the high price market andsome of the middle of the road prices.

Let the new and inexperienced get the low stuff.

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The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

ruskent

Thanks for the relpies guys. My prices were not really low when you look at the market as a whole. Many other companies could of made decent money at my prices. But do to the materials we use, over building everything, and the attention to detail, caused my prices to be to low for me!

In most cases this year, I have been able to get my new pricing. The projects just get broken down into more phases. Which is not the end of the world. And I have a feeling that this will be the case with this customer.

copusbuilder

I walked throught the grocery store with my wife recently, I fill my truck with $3.59 per gallond deisel. I have been buying at the lumber yard and box stores and seen what happens when we have a weak dollar.

Damned straight I am raising my prices.

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