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#155201 - 12/15/04 12:18 AM Lowballer or Overcharger  
A-Line  Offline
Member
Joined: Jul 2004
Posts: 272
Utah, USA
When would you consider someone to be overcharging? When his prices are twice as high as yours?

When would you consider someone to be undercharging or a lowballer? When his prices are half of what yours are?

In this case the person you see as overcharging would from his perspective see you as undercharging or a lowballer.
The person who you see as undercharging or a lowballer would view you as overcharging.

My definition of someone who is overcharging is someone who has set his prices so high he cannot sell jobs and get repeat business.

My definition of someone who is undercharging or a lowballer would be someone who has set his prices so low that he cannot cover his expenses and make a profit for his business.

I think it was George Carlin who said:

Did you ever notice how the guy driving faster than you is a maniac and the guy driving slower than you is an idiot?

I have been told by some customers that I charge too much simply because they found someone that would do it for less.

[This message has been edited by A-Line (edited 12-14-2004).]

[This message has been edited by A-Line (edited 12-14-2004).]


Business, Office, Estimating, Legal:

#155202 - 12/15/04 01:35 PM Re: Lowballer or Overcharger  
slumlordworker  Offline
Member
Joined: Dec 2003
Posts: 84
south bend indiana
over charging is just being a crook. after a decent profit is made and over head is covered that is it. we have some companies here that will try to suck customers dry. IE...ran an estimate for 60amp up grade to 100 and full re wire all walls are open and utility has allready removed over head lines. big name contractor bid this around 11000( over charge) local hack bid this (1600) low balling is doing work just to be doing it and not worring about profit or overhead or even keeping a roof over your head. I some times an accused of lowballing but I fill real comfortable with what I ask for jobs and on some profit is more than 50%


#155203 - 12/15/04 01:38 PM Re: Lowballer or Overcharger  
A-Line  Offline
Member
Joined: Jul 2004
Posts: 272
Utah, USA
Slum,

Is that 50% gross profit or 50% net profit?


#155204 - 12/15/04 01:48 PM Re: Lowballer or Overcharger  
slumlordworker  Offline
Member
Joined: Dec 2003
Posts: 84
south bend indiana
that is gross

on the Hvac side I average 24.3 % gross

but I do alot of new equipment installa


#155205 - 12/15/04 02:01 PM Re: Lowballer or Overcharger  
A-Line  Offline
Member
Joined: Jul 2004
Posts: 272
Utah, USA
I think I've kept my prices low because it is easier to do that rather than raise my prices and have to learn to become a better salesman.
I think most people (myself included) starting out think they need to keep their prices low so they can get the jobs but I think the reality is that you need to become better at selling.
I really need to become a better salesman so I can raise my prices and still sell jobs.
I would like to have a net profit of over 10%
I think I read somewhere that the average electrical contractor's net profit is less than 5%
Does anyone have any statistics on this?
I don't think I would call anyone a crook no matter how high his price was. If he can sell that job at his price over mine than I would call him a better salesman.
On the other hand the low baller isn't using any sales skills to get the job. He is trying to get the job based on price alone.
I think some people want the absolute best job they can get and so whey pay the highest price assuming they will get the best job.
Others just want to get the job done as cheaply as possible so they go with the lowest price.
I would think that the majority would go with a price somewhere in the middle of the low and high price but I think how you present and sell it to the customer will be a big factor in this.


#155206 - 12/15/04 02:06 PM Re: Lowballer or Overcharger  
A-Line  Offline
Member
Joined: Jul 2004
Posts: 272
Utah, USA
What is the %net profit others are shooting for?
I've heard that 15% to 20% is a good target.


#155207 - 12/15/04 06:05 PM Re: Lowballer or Overcharger  
Dnkldorf  Offline
Member
Joined: Dec 2004
Posts: 1,064
nowhere usa
A-Line,
This is an example of what I call a crook.
No names here, but we all know who they are.

An elctrical contractor with multiple full page adds in the local directories who sole intention is to "prey" on the elderly. With sales tatics like "fire hazzard" and "this is an emergency that must be taken care of immediately". Then they "force" the unknowing to sign a work release, which is in fact a contract that allows them to place liens and collect attorneys fees against the consumer in case of cancelled payments.

Some may call them successful businessmen for making enormous profits. I call them slugs.

To me this is not being sucessful, this pratice is immoral.

That is my thing about building a successful company, you have to define to yourself what is successful.


#155208 - 12/15/04 08:13 PM Re: Lowballer or Overcharger  
Electricmanscott  Offline
Member
Joined: Jan 2002
Posts: 1,457
Holden, MA USA
I prefer to work less and charge more rather than charge less and have to work more to make money. I am also an American(the kind that is for free enterprise, not income redistribution through government theivery)so I support a capitalist society. Short of just ripping off little old ladies I say charge as much as you can. Doctors do, lawyers do, auto mechanics do, and we all know plumbers do!


#155209 - 12/15/04 09:15 PM Re: Lowballer or Overcharger  
A-Line  Offline
Member
Joined: Jul 2004
Posts: 272
Utah, USA
My definition of a crook is someone who makes unnecessary repairs such as telling a customer they have a bad switch when they don't. Replacing it or worse leaving the old one in and just say that they replaced it.
Or someone that collects a deposit upfront never to be heard from again.

Some little old ladies have more money then I will ever see in my lifetime.

The big software guy must be the biggest slug of them all.
Maybe there should be a cap on profit. If you make more profit than this cap you would be fined.
I want to make as much profit as possible in an honest manner. I don't consider me to be immoral for wanting that.


[This message has been edited by A-Line (edited 12-15-2004).]

[This message has been edited by A-Line (edited 12-15-2004).]

[This message has been edited by A-Line (edited 12-15-2004).]


#155210 - 12/15/04 09:31 PM Re: Lowballer or Overcharger  
Electricmanscott  Offline
Member
Joined: Jan 2002
Posts: 1,457
Holden, MA USA
Cap on profit? Fined or sent to jail? I can only hope that you are joking or drunk.


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