Howdy all!
I wanted to take a few minutes to respond to something LK had to say in regards to a post about Knowing your Numbers.
LK, with all due respect, I don't understand the point of your message. Thanks for trying to help? Perhaps the town you are in remains the same over the years but many of our customers deal with variables that change on a regular basis. What I was trying to get across was that the majority of contractors we deal with are not even close to assessing their true cost of doing business and in turn, how much the need to charge to turn a profit. This is the leading factor on why so many of them disappear or make little or no money at the end of their fiscal year.
No matter what the situation may be, if you are not charging enough to pay the bills, a customer’s opinion is irrelevant. You need to identify your costs and if it ends up that you need to charge a little more than your competition, make sure your customers know why. If you’re overhead and labor are higher that your neighbors, you must be paying for something that the competition is not.
Perhaps it is a good insurance policy to protect your customer in case of an accident or a tech mistake. Maybe it is a continuing education plan to keep your techs on top providing good and timely service. Perhaps it is your quick turn-around due to excellent dispatching tools and personnel or even your professionalism via streamlined Flat Rate Pricing reassuring your customers that your quote is not dependant of what is parked in their driveway. No matter what it is, it is up to you to let your customers know why you are THE SHOP to deal with even if you are not the lowest price in town.
Bottom line, we all have a tendency to low ball our pricing when quoting from the hip. However, most companies do not take into consideration expenses such as unproductive hours stemming from trips to the supply house, windshield or chat time. Callback labor is another commonly missed expense that can easily break the 10K mark per year with just 1 hour per week of callbacks. Disposable tools, part time help, bonuses, etc. are all expenses that must be factored in to your bottom line. Any of which can eliminate the already low profit you are making by trying to fight a price war.
So perhaps my previous post did not help you in particular but I know for a fact that “knowing your numbers” has helped many of our customers target and achieve the profit they set forth. And keep in mind that not all of us live in your town or have your experience in the industry. Judging by the fact you are a moderator leads me to believe that you are better informed than most. I do find however that it is those people that keep an open mind and listen to various perspectives that end up finding better and more interesting ways to run their shop. To be honest, I thought this forum was a place to share ideas, not judge them...
Marc Blanchard
P.S. Rick, you are right, that was me in the other forum! I heard this was another good place to meet experienced professionals in the industry. Thanks for the kind words by the way, your encouragement is much appreciated!
