The right price
There is a right price, and you need to charge it.
November 22, 2011 by Adam
Of course you’ll run into customers who will demand a certain above-code product, service or process. Often this customer will fancy themselves well-educated and informed. This means they shop a lot at big box stores and/or watch a lot of renovation TV. They’re bound and determined not to be ripped off by some ‘shady contractor’ (thank you renovation TV for pushing that stereotype).
I both dislike and like that kind of customer. I dislike them because they’re fundamentally confused about what makes sense on a renovation or construction project. I like them because they have forced me to step my business up over the years. I figured out that I was going to have to deal with this kind of customer and realized that they would break me if I didn’t learn how to properly charge them for what they were asking.
Charging properly is an art that there is not enough time to fully explore here, but there are three basic rules of it that you must follow:
1) Know your minimum code expenses – For each aspect of a renovation or construction job, you must know how much it costs and how much you must charge to cover the cost. You must know it very clearly and be able to show customers the proof.
2) Charge appropriately for materials – Whenever a customer demands an expensive product, you must charge accordingly. If your baseline cost for paint is $15 per gallon, and you customer demands $50 per gallon paint, then you must charge $35 per gallon more than normal. Show the difference to your customer on your quote.
3) Charge appropriately for processes – This is the one that trips up a lot of contractors because we don’t often realize the extra time needed for different processes. The above example (using screws for framing rather than nails) would mean you have to charge 5 to 10 times as much for the labour of putting together the studs.
There are a thousand more situations that we don’t normally realize. For example, if your customer demands the $50 paint, then you have to take into account that you need to drive to a different paint store than normal, and it will take you longer to order the product as well. If it takes 2 hours (in total) longer than it typically would to order paint from your normal supplier, then you have to charge for those 2 hours. Show your customer the proof, and they will start to understand why you have to charge for it. Show them that your way is great, but if they must have their way that they have to pay for it.