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Wednesday, May 18, 2011

Top 10 Ways of Knowing Your Prices are Too Low!


. . . and You Need to Come to My Class!
1. You get every job that you quote on the phone
If every price shopper that calls sets up an appointment with you, that means you are the cheapest, and if you are the cheapest, in my opinion, that is nothing to brag about. (Read some of my previous blogs about trying to be like Walmart, the low price leader in your market)
2. You are really busy, but still can't afford to buy the things you want? Do I really need a comment here?
3. When someone asks you what your net profit margin was for last year, you don't know what they are talking about. Are you a businessman or not? Go buy the book "How To Sell At Margins Higher Than Your Competitors, by Lawrence L. Steinmetz.
4. You go by the name of "Discount, Budget, Cheap or Fly by Night" Just trying to be funny here . . . or maybe not.
5. You say the phrase "At least it is work" or "At least it is keeping us busy" at least once per week! Personally if I wasn't making a profit doing work, I would go fishing all day instead.
6. You're slogan is "We will beat any price!" It should be followed by "And we'll go broke doing it!"
7. You are afraid to answer the phone. Those pesky bill collectors actually want their money too!
8. You are not set up with a regular paycheck and only pay yourself when there is some cash left over. Your pay should be considered as a regular part of overhead.
9. You have no retirement plan. You should charge enough to have funds set aside regularly to take care of you and your family when you decide to leave the business. Or, have enough service plans & contracts to make your business have value when you choose to sell it. I recommend you seek a financial consultant's help here for a plan to exit your business some day.
10. When you call to schedule a continuing education class with me, you say I am too expensive and you can get it cheaper somewhere else. If you think an extra fifty or sixty bucks isn't worth getting information that will help you turn your business around, there is nothing I can do for you. I would rather not have you as a client.

Thursday, May 5, 2011

What To Do About Gas Prices!


During my last three workshops the topic of what to do about gas prices came up. I usually answer a question by asking the group how they handle it. It went like this . . . "Frank, gas prices are going crazy, what do you think about adding on a surcharge to each invoice of maybe ten or twenty dollars to cover the increase in fuel prices?" I then of course asked the class what they thought and received several different responses such as "We just increase our fee enough to cover the additional cost" or "We add $15 to each call for fuel along with a $10 shop supply fee."

I don't know about you but I get very annoyed when a company adds on extra fees. In fact two years ago I went to buy some tires for my car. After some negotiating we agreed on the price of $145 per tire. An hour and half later the representative tells me my car is ready. I look at the bill and it totals $720! I told the man that this is $35 per tire more than we agreed. He said the $35 was for valve stems and balancing. I told him I didn't request new valve stems and balancing. He explained that they always do this when they replace tires. So I said "If this is a part of the normal installation of tires, why do you charge extra?" I then directed him to put my old valve stems back on and unbalance my tires. Of course he said that it was not possible to do that. At that point I demanded to have my old tires put back on and was no longer interested in doing business with them. Of course he decided to go ahead and accept my original agreement and take the $145 per tire.

To me, when you add on something that is required for each job, just include it in the price, please don't annoy me and your customers with add-ons! Imagine going into a restaurant, ordering a steak for the price of $22 and getting a bill for $30 with an add-on of $8 for preparation and cooking, or an add-on of $2 for a fuel surcharge, or kitchen supplies.

If your costs go up, increase your total fees. Customers are annoyed enough about fuel costs, no need to remind them. Plus, who is reimbursing them for fuel costs when they go to work? That is an argument you may get when you add it on separately.

So in conclusion, get rid of the annoying add-on charges. Just put it in your total fee. In fact the less you break out your pricing the less ammunition you have for those folks who like to pick apart everything.