Sorry for the lengthy hiatus, my Dad passed away January 31st! But I’m back in the saddle and it’s time for further exploration of How Much to Charge.
There is such a thing as a business cycle. There are good times and bad and I’ve certainly seen both. For the average person working as an employee, losing your job can be devastating. But another job can be found. For the entrepreneur, failure can mean losing everything.
For the Christian, we need to trust in the Lord for everything all the time. But that doesn’t mean that we are excused from making wise choices. Mathew 10:16 ESV says, “Behold, I am sending you out as sheep in the midst of wolves, so be wise as serpents and innocent as doves.”
Earning a profit means that you get to survive to see another year, another quarter, another month.
I have a friend who is a consultant. His schedule is brutal – long hours, lots of travel. He has plenty of work, but he has difficulty hiring partners and employees to help with the surplus. Potential helpers cannot grit out the time commitment and travel. If my friend cannot find helpers, that means the competitors can’t either. In fact, competition may be sparse because of the demands of schedule and distance. If ever there was a circumstance that was ripe for a price increase, this would be it.
A Strategy for Increasing Prices
Start with the least desirable customer you would be willing to lose. See if you can secure an increase. Continue with the more desirable customers. The conversation with them can include the fact that other customers have accepted the increase.
Whatever you are doing, you should always be the best value, but not the lowest price. Even if you think what you’re selling is a commodity, there is still a way to impart unique value.
Nobody understands this better than Clint P., our lumber supplier at a large building supply house. I keep reminding Clint what he is selling really does grow on trees and he needs to get his prices down!
Clint knows that if all he’s got to offer is a lower price on a 2×4, that will only win business until a competitor has it for less. Clint is a solutions partner. Whatever conundrum we’re facing in the construction world, Clint is often a reservoir of solutions. The general contractor that has helped us build hundreds of apartments is someone introduced to me by Clint. Many of the subcontractors and trades people we use were also referred to us by Clint. Clint has scoured the landscape to find obscure parts we needed even when the final sale value was very small.
Sometimes, being the best value means reminding the customer of all you’ve been doing for them. Our property management software allows us to keep track of replacements and repairs made by apartment. When it’s lease renewal time and a substantial rent increase has to be sold, that resident will get a detailed report on all we’ve done for them over the last year as a way of justifying the new rate.
A price increase is often the difference between prosperity and just getting by. Often, the cost of completing a job is fixed. A price increase flows right to the bottom line.
Come back next time for the final installment in How Much to Charge.