We ain’t playing with price
We ain’t playing with price
I spent a good many years of my previous career in Business Development and Sales roles. I learned so many things: how to sell, analyze a market, position a product in a portfolio, develop new products, etc. What I really learned was how to price to close a deal.
Keys to success:
Define the thing you want to affect - everything can be measured, be creative, BHAG is a thing.
Know your product - become the expert, if you don’t know then learn, if you stop learning you will get smoked.
Always be closing - there are opportunities to make money everywhere, you have to stay ready, every person has a problem that needs to be solved.
Back in those days we had a price book. With my companies, I have a formula. I have perfected my craft and truly understand my costs. So when I give a price, it is accurate.
In 2014, I learned a very important lesson in business. I learned the importance of being intimate with the numbers. I took over a failing business unit and was focused on the people-side more than the numbers–a huge mistake. The higher-ups damn near castrated me for not knowing every aspect of the P&L; I vowed NEVER AGAIN!
Keys to success:
Number intimacy, numbers are the lifeblood of any business and PROFIT is the goal.
Know your cost on a very granular level, especially in the beginning.
Be able to defend your position, things change, be able to articulate how you came to any business decision.
For example, in my Deck & Fence company, I know the cost per foot down to how many nails and screws I will use per foot and can tell if my guys are slacking based on how far they get in 1 hour. This laser focus is what gives me an advantage over my competitors.
Now back to the people side of things. I have also learned, through residential work primarily, that you cannot remove the people side and just focus on the numbers. This is their home. People do not care about contracts and pricing strategies when they are dealing with their home. Understanding this combined with being able to price accurately is what truly makes the difference.
Keys to success:
Customer intimacy -
Whether pricing a full home remodel or a simple bathroom refresh, accuracy is the name of the game. It does not take me long to price a job. I have developed heuristics (a fancy word for rules of thumb). My subs…well, that's another story. The truth is this some of my best craftsmen cannot produce a well laid out estimate.
Keys to success:
Take care of your people - surround yourself with the best and you will become better.
As a leader - lead from the front, take the insults, shield your people.
Others first - be kind to those below you, many people are just barely getting by; give generously reap generously.
They just know what it will cost them. So, when a client asks me to reduce the price, where does that reduction come from? It does not come from material cost nor does it come from the craftsmen whom I subcontract, so in the past, I’d drop my GC fee. But that isn't sustainable, nor is it beneficial for the clients or for our company. The fact of the matter is that the price is the price. It’s not some arbitrary cost. It’s calculated out. It’s fair and honest. It isn’t a negotiation.
The average homeowner loves when they can brag to their friends about this great deal they got or how they pulled a fast one. On quite a few occasions, I have stepped in on behalf of my subs when the homeowner withheld payment or tried some antics. I looked in the mirror the other day and was like, damn, I am turning into that salty “ole dog”; the gray in my beard adds to my credibility with the guys.
I am the person my subs go to right before lawyers get involved. I don’t charge $500/hr and I am good with words and numbers. 9 times out of 10 things turn out.
The worst part of playing with price is that it creates an environment of hostility and resentment. And the biggest lesson I learned from a master builder is that you have to smell the customers that are out to fuck you. Simple rule of thumb: be cool. And if your prices are all coming in high, look in the mirror, you may be the problem. You see, all trades place a premium on people that are hard to work with. It is not that you may live in a certain zip code, or you have a gate at your entrance; you have a tell and the guys are just covering their ass.
