Friday
Do You Break Down Your Prices?
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
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
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