Pricing and the Economy – How much is Too Much?

I was reading an article the other day discussing pricing your services in a down economy versus a growing economy, and the takeaway was to try to maintain your current pricing. Well duh, that’s pretty friggin’ obvious right?

But the last couple of years have taught us a few things:

  1. Money was way too cheap for homeowners.
  2. It didn’t take long to realize that the days of charging whatever you wanted was over.
  3. Consumers have become more educated, which has made them better buyers – when they need to buy…which isn’t often!
  4. Having some of your competition wash out is a good thing.
  5. Having to take lower-priced jobs sucks…but it beats sitting in your underwear playing PlayStation

Now that it seems the economy is righting itself, there are some things you need to keep in the back of your mind so that you don’t make some of the same mistakes your fellow contractors are going to make:

  1. There still is no money – so homeowners are doing what they HAVE to do, not necessarily what they want to do. You need to market to the need right now.
  2. Adhering to the logic behind #1 is the key to getting through 2011
  3. Your pricing needs to be more in line with the homeowner’s pocketbook. If you find you are losing out on too many bids, you need to check your cost structure, reduce overhead and try again. You can stand your ground on pricing as much as you want, but SOMEONE will do the work cheaper, and you will be the most prideful contractor waiting in the block of cheese and peanut butter line down at the welfare office. So drive out all unnecessary costs for the time being.

The point is, there is still a ton of pressure on pricing. And you can/should be trying to resist dropping yours by offering add-on services to build value around your price. That way you can maintain (or God forbid) increase your pricing by offering added services.

Why?

I get it, I know full well that a bird in the hand is better than two in the bush, but I also know that it will be that much harder for you to raise your prices to those referrals from customers or clients who you discounted heavily in the past to get the work.