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?
RELATED POSTS:
Labels: Construction Industry, Contractor Advice, Contractor Pricing, Small Business Advice
Lumber Demand Falling
From Manufacturing.net: "A slowdown in home building is likely to end the record run enjoyed by lumber manufacturers over the past four years.The Western Wood Products Association, which represents lumber manufacturers in 12 Western states and Alaska, said in its forecast that lumber demand fell in 2006 and is expected to slow further during 2007.
A decrease in housing construction is expected to reduce lumber demand in 2006 by 3.2 percent to 61.9 billion board feet, compared to the all-time high of 63.9 billion board feet recorded in 2005. The slide in demand will continue into 2007, with WWPA forecasting total lumber use at 57.1 billion board feet, a decrease of 7.2 percent.
The WWPA expects new housing starts will be down nearly 9 percent in 2006, and fall another 10 percent to 1.69 million in 2007. Residential construction is the largest market for lumber, accounting for more than 40 percent of the lumber used each year.
The association said the volume of lumber used in repair/remodeling is anticipated to decrease as well, though not as sharply. WWPA anticipates repair/remodeling use of lumber to fall 2.6 percent in 2006 and nearly 6 percent in 2007.
'While home prices will still fall in some areas, we think that housing starts and home sales are nearing a sustainable rate,' said Kevin Binam, the association's chief economist. 'But construction is going to be lower than we've seen in the past few years and that will mean less demand for lumber.'"
Labels: Construction Industry, Construction News
Construction Job News: Bloomberg
Thursday, December 28, 2006
From Bloomberg. "The number of homes for sale fell to a seasonally adjusted 545,000 during the month from 558,000 the prior month. Even with the decline last month, the number of unsold homes remains near a record high, making it less likely homebuilding will strengthen outright, limiting economic growth, economists said."
"Sales of new homes were down 15 percent in November from the same month last year, the Commerce Department said in today's report. The number of homes completed and waiting to be sold rose by 2,000 to 169,000 in October."
"The number of new homes available have averaged 555,000 this year through October, compared with 351,000 during the past 10 years, according to government figures. Existing home sales inventories are also near a record, averaging 3.515 million this year."
"Cancellations of purchase contracts, which aren't counted in the government's numbers, have mounted. 'That’s growing,' said economist Kevin Logan. 'There is even more inventory than actual inventory numbers suggest.'"
"Hovnanian Enterprises, New Jersey's largest builder, on Dec. 18 reported a fourth-quarter loss on cancellations of new-home orders. Hovnanian customers canceled 36 percent of their contracts in the period, an increase of 25 percent, the company said."
"'We didn't have this in other slowdowns, customers walking away,' CEO Ara Hovnanian said."
"The housing slowdown is costing jobs. Builders shed 53,000 workers in the last two months, according to government reports. Manufacturers shed 59,000 workers in the same period, while goods producing companies, some at companies that produce housing-related supplies or products, cut 102,000 workers."
"'Even if sales stabilize at this level, the contraction in construction activity is still in front of us,' said Kevin Logan, chief markets economist at Dresdner Kleinwort in New York. 'That's what's going to affect the economy in the year ahead.'"
"Building permits in November fell to a 1.506 million-unit pace, the lowest in nine years, the Commerce Department reported."
"Sales of new homes were down 15 percent in November from the same month last year, the Commerce Department said in today's report. The number of homes completed and waiting to be sold rose by 2,000 to 169,000 in October."
"The number of new homes available have averaged 555,000 this year through October, compared with 351,000 during the past 10 years, according to government figures. Existing home sales inventories are also near a record, averaging 3.515 million this year."
"Cancellations of purchase contracts, which aren't counted in the government's numbers, have mounted. 'That’s growing,' said economist Kevin Logan. 'There is even more inventory than actual inventory numbers suggest.'"
"Hovnanian Enterprises, New Jersey's largest builder, on Dec. 18 reported a fourth-quarter loss on cancellations of new-home orders. Hovnanian customers canceled 36 percent of their contracts in the period, an increase of 25 percent, the company said."
"'We didn't have this in other slowdowns, customers walking away,' CEO Ara Hovnanian said."
"The housing slowdown is costing jobs. Builders shed 53,000 workers in the last two months, according to government reports. Manufacturers shed 59,000 workers in the same period, while goods producing companies, some at companies that produce housing-related supplies or products, cut 102,000 workers."
"'Even if sales stabilize at this level, the contraction in construction activity is still in front of us,' said Kevin Logan, chief markets economist at Dresdner Kleinwort in New York. 'That's what's going to affect the economy in the year ahead.'"
"Building permits in November fell to a 1.506 million-unit pace, the lowest in nine years, the Commerce Department reported."
Labels: Construction Hiring, construction jobs, Construction News
Our Budget Survey Results
Wednesday, December 27, 2006
Over the last few weeks, we surveyed our network of service professionals about our budgets that we provide in the leads. We conducted phone interviews and asked the question about leaving the in the budgets in last week's Activity Update. We had been hearing from some contractors that they weren't happy with the budget information the jobs being posted on our site. Since our goal is helping you grow your business, we wanted to make sure we are giving you what you need to do that.
Here is what we discovered:
The results from our survey show that a large majority of our nationwide network likes having the budget information that is entered by the project owners. Over 90% want us to leave the Budget question on the project form.
Most said the budget was a good way to pre-qualify the lead. Many feel they could educate the project owner about the true cost of their project. The majority did not feel their budget was the project owner's final decision on what they would pay.
Over 75% said they would still call the project owner, even if they felt the budget was too low. The remaining companies said they would probably not contact them because they only are looking for the "high end" jobs. What those companies may not realize is that the customer may have a high-end job but does not want to promote (over the Internet) what they're willing to spend. How many people walk into a car dealership with their checkbook wide open announcing how much money they have to spend before they even find out what the cars cost?
As more people turn away from their phone book and turn to the Internet to find service professionals, we'll continue to market to them to help bring your company more business. The results from our survey show you like to have as much information as possible about those projects. So, we will continue to provide budgeting information. And we will continue to try to make the budgeting choices as accurate as possible for each category.
If you have any suggestions for our budgets, please let us know!
RELATED POSTS:
Love the Budget or Leave it Out?
Here is what we discovered:
The results from our survey show that a large majority of our nationwide network likes having the budget information that is entered by the project owners. Over 90% want us to leave the Budget question on the project form.
Most said the budget was a good way to pre-qualify the lead. Many feel they could educate the project owner about the true cost of their project. The majority did not feel their budget was the project owner's final decision on what they would pay.
Over 75% said they would still call the project owner, even if they felt the budget was too low. The remaining companies said they would probably not contact them because they only are looking for the "high end" jobs. What those companies may not realize is that the customer may have a high-end job but does not want to promote (over the Internet) what they're willing to spend. How many people walk into a car dealership with their checkbook wide open announcing how much money they have to spend before they even find out what the cars cost?
As more people turn away from their phone book and turn to the Internet to find service professionals, we'll continue to market to them to help bring your company more business. The results from our survey show you like to have as much information as possible about those projects. So, we will continue to provide budgeting information. And we will continue to try to make the budgeting choices as accurate as possible for each category.
If you have any suggestions for our budgets, please let us know!
RELATED POSTS:
Love the Budget or Leave it Out?
Labels: Budgets, Construction Deal
