Is the Price Right?

Is the Price Right?

Benjamin Dyer, CEO and Co-founder of Powered Now, looks at why a clever pricing structure is fundamental to the success of any electrical business.

Smart pricing is about getting paid properly for the work that you do, but how does it work and what approach should you take?

Avoid price competition

Iโ€™m sure youโ€™ve all had customers that simply focus on price and getting your time cheaply as possible. Put simply, those that are fixated with the cost are usually the worst customers, so my first tip is to simply avoid them.

Itโ€™s very hard to do a quality job at a low price, so quoting a fair price for a good job is a much better approach. After all, the only way to always win on price is by underpaying yourself, using inferior materials, or cutting every possible corner.

I suggest you pass these customers on to your competitors. Plus, it’s hard to get any customer recommendations for work like this, which leads into my second tipโ€ฆ

Be known for quality work

Chatting to a recent Powered Now user, Mark Goodchild of Electric-call.net, gave me some food for thought: โ€œDo a quality job and be highly responsive to the customerโ€.

Alongside this, you should always take the opportunity to reinforce this quality message, which can be done by showing pictures of previous work, mentioning qualifications and talking about similar jobs. Getting prospects to speak to happy customers also helps.

Although not every customer will see it, high quality work justifies higher pricing. It also leads to repeat work and recommendation, where thereโ€™s much less chance of price competition.

Price smartly

Smart pricing is about taking all of these factors into account so that you make yourself more profitable and also enable fast growth without going bust. Smart pricing enables you to get the maximum price without being unfair to customers.

Ideas on how to get your pricing smarter include:

  1. Even if youโ€™re going to be flexible on price, never offer an up-front discount because prices will only ever come down from there.
  2. Always be fair to both parties. Ripping people off will destroy trust and if you always find an excuse to charge more then that falls into this camp. Charging more if undetected problems come to light is fair enough e.g. a crumbling wall that wonโ€™t take a new boiler. This is why you should cover this type of eventuality in your terms of business. That way your margin is protected.
  3. Consider providing a service level thatโ€™s pretty much unique. One contractor I know always responds to emergency call-outs in one hour, 24×7, however small the job. Lucrative follow-up work often results.
  4. Some people choose not to quote if theyโ€™re in competition with another company. To do this you need enough leads so that you can turn away low margin work. This may mean that you need to do some marketing but this can be more than paid for with your higher margin.
  5. Be super quick off the mark with quotes. Customers really appreciate this and some will respond with a quick uncontested sign-up.

Invest well

Getting your pricing right is a key business skill, but it isnโ€™t easy and can be a hard discipline to embrace. Being an electrician is both skilful and hard work and you deserve to be rewarded properly.

To find out more about how Powered Nowโ€™s mobile App can make paperwork easier for electricians visit: www.powerednow.com

 

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