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Discussion Starter · #1 ·
With the slow economy in your area some are saying that others have lowered their prices.

In a high economy do you raise prices? Charge what the economy will bear? Or do your prices remain constant?

Mine remain constant with slight raises for the cost of living.
 

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Well that's good if you are getting all the work you want and are making all the money you want to.

Personally I think that tailoring your services and your prices to suit the market conditions you are operating in is the way to do it. Didn't I read somewhere about 7 fat years and 7 lean ones? How would you survive the 7 lean if you didn't put some fat on when things were going well?
 
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Steady as a rock here. My pricing doesn't fluxuate. If work is slow, I pound the pavement & look outside the box for needs not covered by others.

I'm a hardwood floor guy first, but also have a full line wood shop, paint/finish shop. I know how to repair & refinish furniture. I know how to build & repair stained glass windows. I do what's necessary to keep the bills paid. Right in the middle of refinishing 60 science tables for a local school. This is not a job I would take in fat times, but in the middle of winter, it's a nice bone to utilize my paint/finish shop.
 

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Discussion Starter · #4 ·
Well that's good if you are getting all the work you want and are making all the money you want to.

Personally I think that tailoring your services and your prices to suit the market conditions you are operating in is the way to do it. Didn't I read somewhere about 7 fat years and 7 lean ones? How would you survive the 7 lean if you didn't put some fat on when things were going well?
The thing that can happen is you get used to the fat and that because the normal. Then all your thinking is based on the fat as the baseline. So you spend all the money you make in the fat years, going into too much debt because you can 'afford' it in the fat years.

Now if you can store up a little.:notworthy
 

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The thing that can happen is you get used to the fat and that because the normal. Then all your thinking is based on the fat as the baseline. So you spend all the money you make in the fat years, going into too much debt because you can 'afford' it in the fat years.
Absolutely true, and it's one of the hardest traps to avoid. Still no reason not to ask whatever the market will bear, and even if you did, for some bizarre reason, not up your prices when you could, doesn't mean that you'll get enough work when times get hard again.
 

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My price is about the same . I mite be a little optimistic now when i look at a job .
I'm not lousing jobs to contractors , we are all in the same ball park 10%+- Ive been getting beat by 1/2 the price( Low ballers , winos , hacks ) All i can do is tell the HO how i feel .
I Explain that the contract they have in there hand is not complete and the job cant be finished for 1/2 my price . starting Monday my price gos up for 2010. John
 

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.

In a high economy do you raise prices? Charge what the economy will bear?

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Yes and yes. And a lot of people do.

It's the basic tenet of the free market; demand > supply = higher prices. supply > demand = lower prices.

For example:

Two years if a GC bid a job with a 10% profit margin, that would almost be guaranteed to be the low bid. You couldn't get guys to work out of town - even with per diem, so contractors would double or triple their markup for out of town jobs b/c they had so much work lined up, they didn't care if they won the out of town stuff. But demand was so high, that even the ridiculously marked up bids would win.

There was so much work, sometimes only one or two subs would bid the job.

Now, GC's are bidding jobs at 2-3% markup and still not winning bids.

Now some GC's are shedding their workforce of laborers and carpenters entirely and going 100% with subs b/c they can't keep their company guys working between jobs.

Meanwhile drywall and framing contractors are trying to keep they work they traditionally subbed out - doors & hw, trim, etc - just to keep their guys working between jobs. They might lose money having their framers hang doors and slap on trim, but it's what they have to do to to keep their workforce employed.

Sadly, a lot of contractors out here, especially mid-sized GCs, are just trying to hold on until enough of their competition fails so they can get more work.
 

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Master Tile Mechanic
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With only two guys, we're busy or we're not. When we are, we make money, so a little downtime is just fine, but beyond that, the price drops a bit to land a fish or two. If we are stacked up for three months, I'm really not that interested because more work will just make me stress to stay on schedule, so the price goes up out of self defense (not gouging). If you really want it, you will pay. I will be compensated for the stress.

What that means in a real money sense is a range from $450/day to $625/day, mostly aiming for $550. Below $450 I will stay home. For my costs and situation those are tried and true numbers. If crunchtime came calling I would work for a dollar, but so far, so good. Work's been pickin' up.
 

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Scooter
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My pricing for the most part stays within the same realm. At the beginning of the year I will pull out the prior years jobs and do a review. Then I get an updated cost sheet from my suppliers and do my tweeking. The only time I will lower my prices is when I come across one of those jobs that I know we can bang out in a hurry and we have a small gap in the schedule.

I think it all comes down to what your local market can bear.
 

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In a high economy do you raise prices? Charge what the economy will bear? Or do your prices remain constant?quote]

most of our work is design / build. our bids are expensive to produce. we spend more time pre-qualifyihg our clients than our own pricing.

our price variation is tied to out-of-pocket costs for subs and material, and subs we repeatedly work with do the same. some specialty subs change their pricing to control their own workload and we see this more often in up-markets. in down markets they seem to ask for concessions on our schedule which we try to accomodate in some cases.

our direct labor adjusts with inflation and this year we're flat. our indirect labor are markups as a percentage of costs and a a relative constant. exception is we line-item indirect labor and expenses if inflation is acting up, which could be up or down economy.

we bid means, methods and margin and in a down economy, as a constructor, we no-go and eat feed-corn before buying jobs. personally i'll go camping with the family before paying clients to hold all their risk.
 
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