The other day, probably last week sometime, I came across a post in Facebook under one of the groups I’m in that got me to thinking. The post was all about a guy who was complaining that, “I can’t believe I got beat by a guy who sells for this price.”
I’m thinking the price quoted was for most of the contractors in that group between 30 and 50% off their normal price, and it was actually 100% off my normal price.
A couple of the guys were vocal about being beat by a lower priced person and one of my reactions when I posted in the midst of all that was, “well maybe you’re selling to the wrong customer or trying to sell to the wrong customer.”
Because as you know from listening to this podcast that I am pretty much of the belief that you should have higher prices so you could make more profit. But not only to make more profit, but also so you can give better value to your customer.
To be honest, I have never thought about the concept of flexible pricing.
But after that post I got to thinking about something …flexible pricing came over my thought process. I thought about the fact that I am higher priced and I am spoiled by my pricing structure because I would rather do one job today at my price than two or three jobs at the other guy’s price.
But the part that got me the most it is is that I AM spoiled by my pricing. However, what if I needed to lower my pricing to compete in area that I might want to get into.
So I began to think about it more and more and this week I decided to really try an experiment and cut my prices by 50% only on one job to see where I was. If I didn’t know what my numbers are I never would have even considered it, but knowing my margins, I just wanted to see how much I would make. If I could live with the hourly rate if I needed to, if I needed work or if I wanted to go into a new area could I afford to lower my pricing and still be profitable enough to do it?
I think sometimes that we get spoiled, I know I do. So I’m going to use the word is spoiled by the prices that I charge that I would think that sometimes it would be ludicrous to lower my pricing to get work because I am busy all the time, but what if I wanted to add a vehicle or a new crew?
Could I do it? Could I drop my pricing to get into an area? I was surprised by the results of my test.
This week I was working for a regular customer who lives out of town. I was watching her house so I said why not give a shot, so I cut my roof cleaning price by 50%. I cut my house wash price by 50% and went in and did the job and still came out with a superb hourly rate that I could almost live with if I wanted to expand into a new area.
The results, I could live with it all day long so it got me to thinking about could I, or should I even consider using flexible pricing my business in the answer is, yeah I think I would. But I’m not really sure. I am in a good place. I don’t need to grow my business.
Actually it was just a mind exercise for me how about you could you, should you, would you consider flexible pricing.