For those of you who operate in residential markets where the going rate for professional outfits (handyman specials notwithstanding) is below $8 per window in + out, how do you approach your pricing?
Do you stick to your guns and refuse to work for less, even when it means closing a relatively low % of bids?
Or do you adjust your rates to reflect the market average, accepting lower wages for higher closing rates?
Our prices are much more than those listed, we choose to keep with our rates.
We have cleaned many customers that have chosen previously a lower price company and we’re not satisfied.
I would stick with my pricing. There will always be someone that will pay more than your competition.
I always think of the old saying
"You get what you pay for."
Sticking with the prices you have set will bring long-term growth for your business. You are growing a business not just fighting the competition for the lower end jobs that will drop you as a lower price comes to their door.
This may be harder to do in early stages of a business but the value will be seen longterm.
Adapt or die Samuel. I don’t know your market or your customer base, but you are asking different questions.
Do I bargain with a homeowner who wants lower rates? Possibly, but usually not by much.
Would I lower my rates to reflect market rates? If I wasn’t closing enough jobs and struggling to survive - Absolutely. There is nothing sexy about charging high rates, but being home without work. Esp if the competition are all working steady while you’re not.
Maybe you need to lower your prices and work faster. Maybe not fixate on the per pane price and more on how much you make per hour. Personally, I’m 4ish per pane but average 80-100 per hour. I don’t run like my hair is on fire, but I am efficient and steady when on a job.
I’ve worked in several varied markets over the years. Some you can stick to your guns and survive. Others, that’s the fast track to bankruptcy. You have to decide which type of market you are in.
I agree with you in principle, but I think it forgets the difficulty in starting a small business these days. Look how many business that you come across daily that disappear over time. Why do they fail? Perhaps they have management problems. Maybe they don’t have the right price points. Quite often, they over value their product and over estimate the need for their service.
That where our new guys have to be careful. You provide a luxury, optional service for the most part. If they are in an overcrowded market, they will have to be creative to get in the door. This likely will include having lower prices than they would like. Only after becoming established, might they be able to start charging premium.
You are correct, they are growing a business. But if they aren’t smart in the beginning, there might be no business to grow.
Samuel I couldn’t agree more more with what @TexasRich said here…
Adjusting prices in cheapo markets - #6 by TexasRich
The only competition based pricing I do is matching the storefront pricing of an out of town company that seems to be storefront only in my town. Their quality control is pathetic but I match their prices to get marketshare.
I see a problem when a start up with little to no experience competes with lowest prices. They are going to be slower and over think everything, the competition may be still making more at the lower price as they could be faster and experienced.
Sometimes I wonder if the buy who quit because he wasn’t making enough hourly would have had different results with slightly higher prices, increasing his hourly?
Maybe not, it is a struggle, I see both sides.
That’s kind of where I’m at, philosophically. As a hyperbole I’d much rather work half as much at twice the price.
So to be completely honest, dropping prices feels just as scary as raising them. If my math is accurate then shaving 25% off prices from $8 to $6 per window requires a 25% increase in the bid close rate just to break even, and 25% more time spent working just to net the same total income.
There was a guy pop up on a facebook buy and sell site a few weeks ago posting " I Clean windows… small houses $30…, extra large houses $120", he got booked up in 10 mins.
I was dumbfounded at his low prices, since I had just put my minimum up to $120 and 3 days prior had just completed an “extra large” house and I charged $760… thats when I realized I don’t want his potential customers.
As that job I did was probably more than he would have earned in the whole week and for me it was a 10 hr job.
I contemplated messaging this guy and letting him know that I charge 5 times or more what he charges and and booked out for 3 weeks in advance and having to turn away work that needs to be done sooner than I have available.
I decided not to as I thought he may used it against me in some way.
I don’t think he was registered or insured
Majority of the time that’s what it is.
Sometimes it gets a little concerning with the fluctuation of jobs.
This month or season the jobs are flowing, next not so much.
Holding true to your business plan and pricing structure in the long run pays off.
Yea, there are lean times and you start to question your sense of the whole danged thing, but then a few weeks down the road and :::BAM::: the phone is once again your friend.
With that said when hunger strikes I ask “What is your budget? Perhaps we can meet somewhere close?”
Another factor for sticking with realistic prices is resale value of the route/customer lists.I realize that valuation of these assets has many variables but it seems like selling bargain basement priced lists would not be very attractive.
Your math is incorrect. It would require 33.3% more work to hit the same gross. For example, if a $1000 job drops to $750, you need another $250 to make $1000. $250 is 1/3 or 33.3% of $750.
To put that another way, a 20 window house pays $160 at $8 per. If you drop to $6 per, you need to clean 26.67 windows to make $160. That’s 33.3% more windows cleaned.
And that’s not even touching on what you would need to do to make the same net. You have fixed costs associated with completing so much work. You do more work, those costs go up. Fuel, soap, lunch, other consumables. I’m betting you would need to increase your production by around 50% to make up for a 25% price reduction.
The real issue for you is -are you busy? If not, learning how to hustle and adjust for work is vital. There is always another recession around the corner.
If not, I look at it this way. If you do the one house for 160 at the desired price, and do one a day, then you brought in 160 for the day. But if dropping your price to meet the market brings you 2 houses a day, you brought in 240. That’s an extra 80 a day. Not a whole lot but it adds up over the weeks and makes a huge dif if you are not already booked steady.
If you are already booked - then forget what the comp charges. Who really has the time to care about what the others are doing when you are booked out? Use that energy on positive things that are productive.
So the question Samuel is -are you booked to a satisfactory level for yourself?
I’d have to agree with what @Infinity said. Even if you drop your price to capture more work, your costs go up.
I understand the need to have income, like TexasRich points out, but at some point it will be all work, little profits and your day is spent running around for what will not seem worth it to you.
I don’t know what your marketing consists of, but it sounds like you are casting your bait at the same people the cheap guys are. Maybe you need to present your marketing to a different group of potentials or you need to switch up the bait you are using.
I don’t claim to have all the answers, but I personally wouldn’t lower my prices. I’d instead sell my values, and market to those who will appreciate it. Otherwise, if there was no market for what I offered at my price, I would have to fold up, or lower my prices. And I am not lowering prices and devaluing myself. I’d find another business to pursue.
That was going to be my second guess 
No. Not right now, anyway. Summers from June/July until October/November are predictably the lowest business season for FL. Additionally, the last few weeks have basically been forfeit due to hurricane Irma. Now that the calls are coming again, I’m reluctant to let jobs fall by the wayside by pricing myself out of the running. At the same time, I have difficulty believing I can increase my production/booking by 30%-50% to make up for a 25% price reduction to match local competitor’s bids.
Well then you need to what is necessary to stay afloat. Especially coming off of a natural disaster in your market like you are. Don’t make it a permanent adjustment, but you need to stay afloat.
I learned that in the last recession as well as living in Ireland during the worst of the recession. At times, I had to decide - stand by my prices and lose my house or adjust. I still can’t believe how hard I had to work for the little I seemed to get paid. But I survived and never missed a bill. Now I’m more inline with where I want to be. I’d wager that most guys here would have similar stories about survival.
It is the same with most seasonal business - discounts, promotions, freebies- whatever gets people in the door.
“It is not the strongest of the species that survives. Nor the most intelligent that survives. It is the one most adaptable to change” - Charles Darwin
This ^^^
