If you aren’t losing 50% of your potential business on price then you’re not charging enough!
Get your Sales Lost On Price up to 50% by charging more!
- detailed information about this here
But how does this work in practice?
Here are three areas of clarification for you……
1 – Rich and Poor customers
Suppose you can tell whether your customers have plenty of money or not. maybe they are large or small companies, maybe they are B2C customers and you can see their house or car before you quote them a price. Should you price differently for them?
Well, you could quote the rich ones a price that half of them will pay, and the poor ones a (lower) price that half of THEM will pay. Or, you could treat them all as one and quote a price that half of the total people will pay – so you’ll end up with mostly the richer customers. Generally, that’s what you should do.
Will that matter? Well, only yes if a) you want to help poorer people, at a cost to your income, which would be noble of you, or b) if the rich ones are somehow less fun to work with. …which certainly can be the case sometimes!
Which takes me to….
2 – Easy vs Hard jobs
Suppose the customers don’t really know the difference, but you find some jobs more difficult than others – …or less enjoyable! Should you charge more for the jobs you don’t like doing, or which take disproportionately more time? Yes, certainly!
You could charge a bit more for the harder ones, so you make the same profit margin on them, and you’ll probably end up spending half your time on them and half on the easier ones. But why would you do that? I recommend charging disproportionately more for the ones you don’t want to do, so you end up doing only a few of them, for a really good price, and mostly doing the ones you enjoy. But of course that means less profit overall. You can choose where you want the balance to be between total profit and total enjoyment in your working life.
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3 – Smaller vs Larger jobs
Of course you would have to charge more for a larger job – but the question is whether your hourly rate goes up or down for a larger job. In some ways there’s an economy of scale for a larger job – only one bit of selling and one bit of invoicing. So your hourly cost is probably less for these.
But how much will customers pay? They might pay more per hour for a bigger job, because fewer people can supply that service to them. Or maybe they pay more per hour for the small jobs because a) they don’t notice the smaller total sums and b) they know these jobs are more fiddly. It will vary, but you’ll know – or you could find out by experimenting with your prices and seeing what people will pay.
And of course it could be that you enjoy the more difficult / bigger jobs, so you’d charge less per hour for them, so you get more of them (as in 2 above) – but if you don’t like them then you’d swing the mix against them, by charging more. You can choose.
So where is my 50% rule in this? Well, if you don’t want to discriminate between small and large jobs then you would charge a price where you get 50% of the work (by volume or by number of jobs, either is fine). If you want to swing the mix then you want your overall average to still be 50%, but maybe getting 70% of the ones you like and only 30% of the ones you don’t like.
