I say continue as long as it works for you and don't listen to any gossip. People talk crap all the time. Someone once told me, if you're getting 90% or more of the bids you send out, then you are too cheap. I think right now in this economy people are price shoppping and you should be happy to get the jobs you want and make your profit. I've heard people say I'm too expensive, very reasonable, really cheap. Go figure.
What is too low?
Ok so I will set the stage...
Recently, through a customer, I was told that one of my competitors was badmouthing my company/pricing. Basically said I was undercutting " real painters". I don't really know who this person is, really don't care. Actually if they know who I am after just over a year then I've done something right. Anyway this brings me to my question, what is too low? I mean I'm not always the low bidder, I am showing net monthly profit percent of 19%. I have never left a house without the customer being satisfied. So is there something wrong with being the low bidder?(while showing profit). I've been thinking about this alot lately, I mean if I'm known as the low bidder does that mean customers will see my price as the one to compare others? If so, then its reasonable to think that customers would always want me to be one of the 3 estimates, and that seems okay to me. What does everyone think?
Continue as long as it works for me or raise prices?
Recently, through a customer, I was told that one of my competitors was badmouthing my company/pricing. Basically said I was undercutting " real painters". I don't really know who this person is, really don't care. Actually if they know who I am after just over a year then I've done something right. Anyway this brings me to my question, what is too low? I mean I'm not always the low bidder, I am showing net monthly profit percent of 19%. I have never left a house without the customer being satisfied. So is there something wrong with being the low bidder?(while showing profit). I've been thinking about this alot lately, I mean if I'm known as the low bidder does that mean customers will see my price as the one to compare others? If so, then its reasonable to think that customers would always want me to be one of the 3 estimates, and that seems okay to me. What does everyone think?
Continue as long as it works for me or raise prices?
1 - 19 of 19 Posts
I suppose it boils down to how you are making your profits? are they coorect? are you paying emplyees correctly, taxes? workmens comp, liability? etc and so on.. if you doing things correctly and still have those profits...
Then
Then
Sounds like sour grapes coming from your competition.
If you give the customer what they want, run a legit business, pay taxes, insurance, don't steal your supplies, don't screw your workers or customers, provide a safe working environment, etc etc, then you can charge whatever you want. Hell, even if you were hell bent at losing money, how can others complain ?
I think it's called competition in a free market, which the last time I looked was legal in these United States.
If you give the customer what they want, run a legit business, pay taxes, insurance, don't steal your supplies, don't screw your workers or customers, provide a safe working environment, etc etc, then you can charge whatever you want. Hell, even if you were hell bent at losing money, how can others complain ?
I think it's called competition in a free market, which the last time I looked was legal in these United States.
Alot of companies will bad mouth you no matter what. "He's a low baller, he way over charges, he hires illegals, etc". If you're running a legit company & making the money you want to make, and the work keeps coming, screw what the jealous crybabies say.
On a side note, we've got a few jobs from being the WAY high bidder. Like double what the others were bidding. Alot of people in the higher end areas have it stuck in their head what costs more must be better & want it. Weird.
On a side note, we've got a few jobs from being the WAY high bidder. Like double what the others were bidding. Alot of people in the higher end areas have it stuck in their head what costs more must be better & want it. Weird.
everything is above board, 1,000,000 liability and 1,000,000 umbrella. W/C and pay taxes and I offer my guys health ins. I guess everyones right about sour grapes. This other person singled me out, and it got under my skin because I think i'm fair. (actually the customer called me because the painter mentioned me, i wasn't even a canidate until he brought me up.)
Micky, in my unbiased opinion you need to double, maybe even triple your prices
Oh, and by the way it wasn't me
I received this email from a bid that I put in that I really enjoyed and it encouraged me to keep my prices up. I haven't won the job (yet) but I think if they find it in their budget I might have a chance.
"Thank you. We are currently digesting all of this. It is more expensive
than we were thinking it would be. As I'm sure you are aware, your estimate
was much higher than the others we received. However, I am a firm believer in "you get what you pay for" and don't always necessarily go for the lowest price. It seems that the process you use is best....."
I think the best thing that is said when I get a referral (besides the quality of work) is that "he's not the cheapest but he's not the most expensive either"
Just find that happy medium. As long as you are not trying to be the cheapest guy in town then your rates are what they are. I have really been shying away from trying for the low bid unless it is something really easy.
Oh, and by the way it wasn't me
I received this email from a bid that I put in that I really enjoyed and it encouraged me to keep my prices up. I haven't won the job (yet) but I think if they find it in their budget I might have a chance.
"Thank you. We are currently digesting all of this. It is more expensive
than we were thinking it would be. As I'm sure you are aware, your estimate
was much higher than the others we received. However, I am a firm believer in "you get what you pay for" and don't always necessarily go for the lowest price. It seems that the process you use is best....."
I think the best thing that is said when I get a referral (besides the quality of work) is that "he's not the cheapest but he's not the most expensive either"
Just find that happy medium. As long as you are not trying to be the cheapest guy in town then your rates are what they are. I have really been shying away from trying for the low bid unless it is something really easy.
Homey, too low is when you don't have enough money to run your business comfortably. If you are doing well for yourself and still considered low, increase your prices to make more profit.
I totally agree.Homey, too low is when you don't have enough money to run your business comfortably. If you are doing well for yourself and still considered low, increase your prices to make more profit.
I would just add that if you are making 19% net profit, I hope you are including your salary-- as owner, salesman, and painter-- in the expenses before that net profit. If not, then you aren't making 19% net profit and you do need to raise your prices. Depending on your revenues and how much time you spend in the field, your pay should probably be 20% to 30% of revenues.
There is nothing wrong with being the low priced guy. WalMart has done well with that approach. Unfortunately, many contractors take that route and don't know their costs nearly as well as WalMart.
If I heard a competitor was dissing me, he'd be getting a phone call. I'd put an end to that crap.
Brian Phillips
That's not as weird as you might think. There is a perceived value. I get customers who call and say they got 3 prices-- $3,000, $4,500, and $6,000 (me). They eliminate the low guy immediately. They call me because they wonder why I am so much higher. They perceive additional value, but maybe not that much additional value.On a side note, we've got a few jobs from being the WAY high bidder. Like double what the others were bidding. Alot of people in the higher end areas have it stuck in their head what costs more must be better & want it. Weird.
There are a lot of products that have a very high perceived value. The actual value may or may not be real. To the customer, it is the perception that is most important in the buying decision. For the company, the real value if the most important in the long term. If the value isn't real, the company won't last.
Brian Phillips
If "Too Low" is the worst your competition can say about you I would not worry. If you can pay all your overhead, and are happy with what's left for you, who cares what they think.
"Real painters" are not always "Real Businessmen", and some painters production rates are so low that they have to charge high prices to cover the salaries of thier slow employees.
"Real painters" are not always "Real Businessmen", and some painters production rates are so low that they have to charge high prices to cover the salaries of thier slow employees.
salary includedI totally agree.
I would just add that if you are making 19% net profit, I hope you are including your salary-- as owner, salesman, and painter-- in the expenses before that net profit. If not, then you aren't making 19% net profit and you do need to raise your prices. Depending on your revenues and how much time you spend in the field, your pay should probably be 20% to 30% of revenues.
There is nothing wrong with being the low priced guy. WalMart has done well with that approach. Unfortunately, many contractors take that route and don't know their costs nearly as well as WalMart.
If I heard a competitor was dissing me, he'd be getting a phone call. I'd put an end to that crap.
Brian Phillips
I'm going to keep everything the way it is to see if i can hit my goal this year and re-evaluate in the fall for the upcoming year.
It depends on how your doing it.
Contractors with no work like to talk and let them. I don't like losing bids. But I do like not being the lowest bidder. When I am I get scared.
Contractors with no work like to talk and let them. I don't like losing bids. But I do like not being the lowest bidder. When I am I get scared.
dont much matter how bigga tires ya put on your truck,, sombody'll come along with a bigger set. just do what works for you. they say Im too high! but it keeps me in the higher braket of folks. If your good they'll call.
dont much matter how bigga tires ya put on your truck,, sombody'll come along with a bigger set. just do what works for you. they say Im too high! but it keeps me in the higher braket of folks. If your good they'll call.
very true
I agree with the preceived value of higher bids. I am in most cases, one of the highest bidders if not thee highest bidder for jobs. People do in fact, in most cases, preceive higher bids as giving them a higher value.
I word my estimates with the added value I preceive my little business provides over my competitors. I get alot of work from being the highest bidder and every customer is left feeling that they got more than they paid for. It is my business goal to build a freindly relationship based on trust and added value to every customer. And I work my ass off to deliver on that.
If you are happy with your profits then don't worry so much about what the competition says. I suggest that if a potential customer says something about gossip like that again. Hand them a sheet of past customers to call, that you've asked permission from to do so.
And tell the potential new customer to ask each of them if they felt that they got more value than they paid for. Then hand them your estimate and say you'll feel the same way once I've worked for you.
I word my estimates with the added value I preceive my little business provides over my competitors. I get alot of work from being the highest bidder and every customer is left feeling that they got more than they paid for. It is my business goal to build a freindly relationship based on trust and added value to every customer. And I work my ass off to deliver on that.
If you are happy with your profits then don't worry so much about what the competition says. I suggest that if a potential customer says something about gossip like that again. Hand them a sheet of past customers to call, that you've asked permission from to do so.
And tell the potential new customer to ask each of them if they felt that they got more value than they paid for. Then hand them your estimate and say you'll feel the same way once I've worked for you.
I believe customers do usually get what they pay for. regardless of my price or how high or low my bid is, my work is still the same: TOP NOTCH! We are in this business to make a profit so we can provide for our families. I try to be as fair as possible in regards to customers because I know how people think so I make them understand why I'm the Professionial and Add Value to my Bid by showing how I differentiate myself from competitors.
I believe customers do usually get what they pay for. regardless of my price or how high or low my bid is, my work is still the same: TOP NOTCH! We are in this business to make a profit so we can provide for our families. I try to be as fair as possible in regards to customers because I know how people think so I make them understand why I'm the Professionial and Add Value to my Bid by showing how I differentiate myself from competitors.
Yeah - that.... :thumbup:
As long as your true net profit is 19% AND you factor in the cost of replacing you on a job AND you mark up your materials 25%-30% AND you pull 25%-30% out for yourself then you are running a good model. Consider the badmouthing as envy.
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