Do You Break Down Your Prices?
Friday, December 29, 2006
Your company offers a service and along with that service is the price you charge for your knowledge, labor and materials. Most times, the service you offer is considered very expensive by anyone's standards. Many remodeling and construction companies fear that sticker shock on an all-inclusive total price will scare many away. So, they break down the costs into partitioned or smaller amounts.
Did you know that breaking down your costs into smaller amounts may not be the best business method for your company? Studies have shown that when clients are given a total price, even if it's high, it allows them to focus on the overall benefit of the service. Paying $40,000 for a kitchen remodel, for example, will allow them to focus on family gatherings, making meals with ease, and the luxury of new appliances and cabinets. When the price is broken down to include the costs of the counters, the floor, the labor, and the delivery charges they may want to remove parts of the project. If you're thinking it helps to present the partitioned prices to soften the blow, it could backfire on you. When prices are broken down it forces the client to look into what they're getting for the money.
Partitioned pricing helps when you want to get clients used to a secondary benefit that they ordinarily take for granted. For example, if you can show a client you'll install a product and only charge them a small delivery fee - because you manufacture the product and don't need to order from another company. You're showing a benefit over your competitor who charges a huge delivery and handling fee.
For a large project, to help with sticker shock, consider giving them the price per square foot along with the total price and continue to point out the main benefit of their project.
Contractors: Don't forget to bookmark our Contractor Update for more helpful business tips, construction news, website updates, and information on how to help you expand your business. Our goal is to help you succeed.
New to the blog? Did you know you can register for free on our main site to see if we have any remodeling, repair, or construction jobs in your area?
Did you know that breaking down your costs into smaller amounts may not be the best business method for your company? Studies have shown that when clients are given a total price, even if it's high, it allows them to focus on the overall benefit of the service. Paying $40,000 for a kitchen remodel, for example, will allow them to focus on family gatherings, making meals with ease, and the luxury of new appliances and cabinets. When the price is broken down to include the costs of the counters, the floor, the labor, and the delivery charges they may want to remove parts of the project. If you're thinking it helps to present the partitioned prices to soften the blow, it could backfire on you. When prices are broken down it forces the client to look into what they're getting for the money.
Partitioned pricing helps when you want to get clients used to a secondary benefit that they ordinarily take for granted. For example, if you can show a client you'll install a product and only charge them a small delivery fee - because you manufacture the product and don't need to order from another company. You're showing a benefit over your competitor who charges a huge delivery and handling fee.
For a large project, to help with sticker shock, consider giving them the price per square foot along with the total price and continue to point out the main benefit of their project.
Contractors: Don't forget to bookmark our Contractor Update for more helpful business tips, construction news, website updates, and information on how to help you expand your business. Our goal is to help you succeed.
New to the blog? Did you know you can register for free on our main site to see if we have any remodeling, repair, or construction jobs in your area?
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Labels: Construction Industry, Contractor Advice, Contractor Pricing, Small Business Advice
