I’m just going to flat-out say it: most contractors I know are under-confident and under pricing.
Which is understandable— there’s a very fine line you need to follow when it comes to pricing. And as we all know, often times, clients will base their decision off the lowest price offered— no ifs, ands, or buts.
So how do we go about changing this? How do we get confident about our pricing, so that we price at something reasonable and doable for ourselves, while still landing clients?
How do you price? Most contractors sell hours, blocks of hours, or months of their time or their teams’ time.
Ex: “My hourly rate is this ________.” Or “you can buy a six-pack of options for ____________.” Or: “This project is going to cost you ___________.”
Think about what you’re doing when you use messages like these. What are you really saying?
You’re just selling like everyone else. You’re selling just time and materials. You know this much per hour and that much for labour, and this much for materials.
That’s old-school thinking.
Let’s start winning jobs not only based upon price of labour and materials, but also based upon you.
So how do we pick a premium price and know we’re worth it?
It’s really simple. You just need to think a little deeper.
You need to know two numbers:
1) What’s the cost of not hiring you?
How much will it cost this prospect to fix mistakes done by a contractor who’s not qualified nor licensed? What are the financial repercussions if it’s done wrong? What are the health repercussions to them and their family? Think about the mental and emotional stress that could happen by choosing the wrong contractor.
How much is your being licensed worth? How much is your amount of years’ experience worth? How valuable is your promise to do things right on everything, on time? How valuable is your guarantee of keeping a clean and safe workspace— using only the best and most cautious procedures when working in a family home?
2) What’s the potential ROI (Return on Investment)?
What is the value of enjoying your work for a lifetime? What sort of increase in property value can you give them by means of additional features? How much more efficient can you make their lives?
What is the value of good workmanship? What is the value of an expert’s opinion? What is the value of not having to re-do a project come 10 years time? What is the value of knowing their house is worth more now because of the additions you suggested they do?
Once you determine these two numbers, it’s really simple. You pick a price that is an incredible deal for them in terms of the ROI they’re going to get, as well as a price that’s good for you.
That’s how to price for you.
If you have any questions about this article, or would like more insights on how to price as a contractor, please don’t hesitate to contact us.
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