Pricing jobs for trade services is such an almost taboo subject and as a result pricing amongst companies in the same trade can vary wildly.
Have you heard a client say “your double my previous quote” yet you know full well you’re a lot cheaper or on par with several Companies you know.
Pricing jobs right and making good profit is vital to business growth and growing your company.
During my time owning the driveway company I knew of 1 company who were more expensive that us. Everest being one of them and they were wildly more expensive than us yet there were times when our competitors price was a third or less than ours.
So if I was £14,000 for a driveway I knew Everest would be around 22-24k yet the sole trader round the corner was under 5k!
How on earth is that even possible for pretty much the same job and how come we fitted more driveways than any other company in the UK………
Before we talk about why you should be charging your worth and why the sole trader needs to up his pricing let’s talk about these prices from the firms.
The sole trader charged 5k for this job. It’s clear he is making a wage and he’s probably happy with the wage and he will be happy to be working for himself with a degree of freedom (rare) however the sole trader is thinking so small. He can NEVER grow any bigger at these prices.
Everest are a multi-national company with expensive offices. Expensive salespeople, managers, regional managers, board of directors and huge marketing costs. Simply put they have to charge more to pay all these wages/commission and dividends.
My company had overheads but nothing to the amount of Everest but more than a sole trader.
If you stop for a moment and think of the directors.
What director do you think worked the most hours?
If you guessed Sole Trader you would be right (by a country mile)
What director do you think earned the least?
Again if you guessed sole trader you would be right (by a country mile)
What director do you think was the most skilled at fitting driveways?
You guessed right again the sole trader (by a country mile again)
So the most skilled and knowledgeable person out the three works the most hours and earns the least by far!
How is that possible and why?
Simply put the sole trader is thinking too small, he or she is thinking like an employee and not a business owner. In my experience most sole traders are earning between 25-60k per year after expenses. Most good savvy business owners in UK in the SAME INDUSTRY are upwards of 250k and working a LOT less too because they price accordingly.
Pricing accordingly allows the savvy business owner to…..
- Employ several staff members to take multiple tasks off them meaning less work.
- Outsource several jobs such as bookkeeping and marketing, less work.
- Take days off at leisure.
- Spend time with family.
- Buy expensive machinery to speed up job therefore fit more in throughout the year, more profit.
- Continue to increase pricing because his marketing staff will continue to pull in more leads as that’s his or her job (marketing) and the savvy director knows that sales is a numbers game. The more people they pitch the more sales will convert.
- Provide a far better service as they have the manpower to do so (because they can afford to hire) compared to sole trader Who takes a week to send quote or three rings to answer phone or 2 months to fix a snag.
Until you’re charging more you will always be doing everything, you will have no time for family or friends, you can’t afford to hire or it comes directly out your wage which is already too low and this rat race will continue for decades UNTIL YOU put it right and put systems and processes (normally free or cheap to implement) in place to allow you to confidently raise your prices and raise your profits and finally own a business rather than owning a job.
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Good Luck
