Don’t Be Afraid To Charge What You’re Worth!

Posted by David Chism | Tue, Sep 17, 2019

 Don’t Be Afraid To Charge What You’re Worth!

I’ve had many, many inter­ac­tions over the years with busi­ness own­ers who are excel­lent crafts­men but strug­gle to make a liv­ing run­ning a home improve­ment business. 

They do good work, offer fan­tas­tic ser­vices, and appear to be doing all the right things. So, what’s missing?

The com­mon prob­lem I see with many of these small busi­ness own­ers is that they sim­ply don’t know their num­bers. In oth­er words, they haven’t iden­ti­fied what they are worth. Instead, they charge a price they think a con­sumer is will­ing to pay instead of work­ing hard to under­stand what it real­ly takes (and costs!) to ren­o­vate, paint, or repair a property. 

Don’t Fear the Con­sumer: Charge What You Need To!

I was talk­ing to one gen­er­al con­trac­tor this year who men­tioned he was charg­ing $35/​hour. I asked if he was mak­ing mon­ey and a prof­it. He said he was not, and that it was a real strug­gle. He believed that $35 was a good rate that peo­ple were will­ing to pay in his area. 

I was able to help him think a bit more about the cost to do a job. 

We talked about how much time he spends in the course of a day, run­ning to get mate­ri­als, buzzing around town to do oth­er esti­mates, project man­age­ment, and so forth. It did not take long to real­ize that $35/​hour was nowhere near enough to be charg­ing a customer. 

The thought of rais­ing his prices to even $50/​hour was hard for him to swal­low. He did­n’t think peo­ple would pay him that much. 

If you can­not charge what you’re worth, it’s best to go work for some­one else and not deal with the stress of run­ning a busi­ness and los­ing mon­ey. That was my advice to him, and it holds true for any­one who is unwill­ing, or unable, to know their num­bers and stick to them.

Time To Raise Prices? It May Be Bet­ter Received Than You Think

Many years ago, my dad told me that he was charg­ing a cer­tain hourly rate for paint­ing. I don’t remem­ber the exact amount when he told me the sto­ry; per­haps $35/​hour as well. He then looked at his clos­ing rate on esti­mates that he had worked on at the time. He was clos­ing about 35% of the jobs he bid. 

After attend­ing a few busi­ness sem­i­nars, he real­ized he need­ed to raise his prices. He bumped up his hourly rate by $10 an hour. Noth­ing else changed. And, you know what? He still sold 35% of the jobs he looked at but had $10 more an hour in his pocket. 

It was that one thing that began to change my dad’s think­ing about run­ning a paint­ing busi­ness. He com­mit­ted him­self to hire a busi­ness coach and doing a deep­er dive into know­ing what to charge and why he is charg­ing that amount. It com­plete­ly changed his busi­ness, turn­ing it into a sus­tain­able and prof­itable com­pa­ny (and it still is). 

Many of my blog read­ers already know their num­bers. I’m preach­ing to the choir here! 

But if you agree with me and know of a con­trac­tor friend who is still strug­gling to make it in the home improve­ment indus­try, for­ward this to him or her. Encour­age that indi­vid­ual to seek out a good busi­ness coach. 

You can’t afford NOT to!

About David Chism

David Chism started his business out of a passion for helping small contracting businesses grow, be more profitable and become better known to their target clients. One lifelong hobby of David is using techie gadgets. So this blog is a place where he writes about technology, marketing ideas, just for fun (humor), personal thoughts on small business and more.


Subscribe to the Blog

Please provide a short summary of why you are reaching out today.