Pricing your Service

[byhammerandhand]

Got a call this morning from a guy with wobbly chairs.   I gave him my price (which is almost always a loss-leader for me because they often take more time.).     He questions if that's the price if he brings them to my shop.   Yes, that's right (you don't really expect me to make a pick up and delivery for that price do you???)     I tell him that I'm out the door in a few minutes, but someone will be here if he wants to drop them off in my absence.  He says he probably won't.   

Of course, I could do it for less,   and worse.

"There is hardly anything in this world that some man cannot make a little worse
and sell a little cheaper, and those people who consider price only, are this man's lawful prey. It is unwise to pay too much, but it's worse to pay too little. When you pay too much you lose a little money - that is all.   When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.    The common law of business balance prohibits paying a little and getting a lot; it cannot be done.   If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better"

John Ruskin (1819 - 1900)

[baileyuph]

Have confidence in yourself and that is accomplished by a measure of your success.

If I was selling a product or service that was equal in every way with everyone else doing the same service or product, then I explain to consumers that pricing is the way to base your decision.  But, the logical follow up to that premise is to ask them if the product or service they are seeking is equal every where else?  Most times they get the idea, that all skills are not equal.  Therefore quality matters.

As time passes and the number of crafts people providing the service, actually the customers are the choir, they end up telling me something like glad to see you are still in business because your skill is dying. 

So, getting the business isn't hard, but a good craftsman (person?) can benefit on doing the job not only well but more efficiently.  For example, I just did an anolog patten of some five year old truck seats that are starting to come in.  It has cut my time significantly.  In furniture repairs, I have a special tool rack for that work, tools already set up to do specific things.  This has speeded up repeat type repair work and at the end of the day increased profits measureably.

We want to always get better, but equal in importance is Faster! 

At the end of the day, I still enjoy working.

Doyle 

[UKSteve]

Ever since I started I made it a policy to quote a fair price for a job, fair to both the customer and myself. I don't want to resent the piece or customer because I'm working for nothing.
I try and price by the hour, why not, I consider us to be professionals. Just becasuse I choose an apprenticeship to University dosen't make my skills any less worthy. Obviously my hourly rate has a way to go before I reach that of a Doctor or Lawyer 8)
I've never loaded a price to be able to knock it down to secure the work. I visit a vaiety of people some live in small cottages some live in stately homes, I never bump the price up because I think a customer is wealthier than another. If someone asks me to cut the price I politely refuse. I am never idle, sure I have low overheads so can roll with the ebb and flow but I still need to work and work I do. All my work is word of mouth (no advertising) with many returning customers.
Does that sound arrogant, sorry if it does, it's not meant to. I've been in upholstery/trimming a long time (33yrs) so it didn't happen overnight, it wasn't and isn't always easy and it could all end tomorrow.

Next time you visit someone with a new Merc or BMW on the drive consider how much the customer pays to have those cars serviced usually by a lad who has done less than a years training. It's all about percieved value, if you don't value yourself why should your customer.

Have confidence in yourself and your trade.

Sorry to ramble on.

[baileyuph]

You have been at it a while, Steve.

I presume you are primarily furniture?  What capacity, true antiques or good older furniture, or do you get into repairs on newer furniture?  Are you confronted with working on the newer imported Asian furniture or is that a strong marketing force in your territory?

Doyle

[byhammerandhand]

What do you respond when people say something like, "Can you do it for less?"    I typically just say, "No."   I'm wondering if it would just be too snarky to say, "Why would I do that?" and put them on the defensive.

The one I hate is "Could you do it for less for cash?"    "So, you want me to lie and cheat the government, but trust me not to lie and cheat you?"

[gene]

snarky
adjective \ˈsnär-kē\
Definition of SNARKY
1
: crotchety, snappish
2
: sarcastic, impertinent, or irreverent in tone or manner

"I've never known you to be snarky, byhammerandhand. OH NO! Not you!!! Never!!!" - said the crotchety old gene, with a sarcastic nod of his head and an impertinent conveyance of superiority from one who clearly can't be bothered by such ridiculous tripe.

When asked if I can do it for less, I say 'No'. I point out that if ALL you are looking for is the cheapest price, I'm sure you can find a cheaper price. (Emphasis on the word "cheaper".) I then point out that I try to provide service and quality that is second to no one. That's why my price is what it is.

When asked about doing it for less if they pay cash, I tell them that I pay tax on all my income - federal, state, local, and sales tax. This tends to make me seem honest and them not so honest. My business adviser from SCORE said to pay taxes on everything. That way you don't have to worry about anything and you eliminate the possibility of getting into trouble in the future.

You also don't have to worry if that customer was seriously interested in getting upholstery work or if they were working for some particular tax agency.

gene

[jojo]

You guys are funny! I can't be snarky to potential customers. I think guys are better at that.  :P

[Tejas]

I am so naive. Whenever I'd offered less for cash, I'd offered avoiding the credit card charge. Next time I'll be more specific precisely what I'm suggesting.

[JDUpholstery]

charging less for a cash customer isnt saving you the credit card charge anyways....should be the same price cash or charge

[byhammerandhand]

I think they're implying it's an under the table deal that I won't have to report as income.

charging less for a cash customer isnt saving you the credit card charge anyways....should be the same price cash or charge

[sofadoc]

I think they're implying it's an under the table deal that I won't have to report as income.

charging less for a cash customer isnt saving you the credit card charge anyways....should be the same price cash or charge

Many retailers that accept credit cards pass their merchant fee (from the processing company) right on to the customer. Then they offer the customer a "Discount for cash". Nothing illegal, or unethical about it.



Several years ago, I came through a sales tax audit "clean as a whistle", but it was still very stressful. So I say no when they offer cash if I'll "wink-wink" forget about that nasty old sales tax.

[UKSteve]

DB Yes I do mostly furniture, my trade papers say Coach Trimmer, I did my apprenticeship with British Rail. Back then the train seats were still made of horse hair, lots of quilting, blind quilting and hand sewing so this training translated well to antique furniture. For a while in the mid 80s I worked for a well respected UK furniture manufacturer called Peter Guild. This taught me a lot about high end modern furniture. I set up in business the first time late 80s and did that until 2000. I then got offred a position with Aston Martin and ended up running the DB7 DB9 and V8 trim shops for a few years. I have to say I really have no desire to go into car trim. Now I find myself back on my own and have been since 2006. 

I have no idea about the Asian furniture? I don't think it's hit us yet. Can you explain a bit more.

As I said most if not all of my custom is word of mouth I guess that means that the customer is of a type maybe. The nice thing about word of mouth is that I don't need to sell myself.

Going back to price dropping, my favorite is when someone you've never dealt with rings up (maybe its a small scale manufacturer) and say 'if you do us a really good price there will be more' my reply is 'no I'll price this as I normally would then if there is more I'll review the price' do you really want to work for someone who wants to screw you to the floor. Those calls rarely come to anything and I'm glad.

Cash: I do get offred it and sometimes it's nice but I don't offer discount for it. Most of my payments are via cheque although a few people like to do electronic bank transfers.

Credit Cards: Like Sofadoc said some companies here add a surcharge to use a card and make that clear, maybe that's a way for smaller businesses to handle it?

[Mojo]

Steve:

I wished I had a dollar for " I can send you more business if you cut me a break ".... But then again almost all of my work is referrals and word of mouth. It is the silent customers who seem to bring me the business. The ones who run their mouth rarely produce referrals.

I enjoyed spending time in the UK. I was everywhere from Edinburgh to Ross on Wye. Had some very great memories there. Seen the devastation in the once booming Sheffield, flew my first bi plane/ open cockpit out of Duxford and ate some of the best fish and chips in Whitby.

The one thing that sticks out in my mind is the expense of everything there. I was really amazed at the taxes, wages and general overall cost of living. It isn't just the UK either. I seen the same thing in Holland, Luxembourg, France, Germany and Belgium.

In regards to cash, I do get cash payments ever now and then. It goes into our safe for a rainy day fund.  :)

Chris

[bobbin]

Numbers.  I know what I have to have to meet my weekly "nut".  When I factor in what I must pay in taxes I know what I must charge to "make my nut".  Pretty easy on paper, but not always so easy IRL, esp. when my quotes are so often met with a curt, "thank you". 

I have a different take than many on this site when it comes to taxes.  As a citizen I've derived great benefit from tax revenues of others as well as those of my friends and fellow citizens.  I enjoy a fabulous road system, and I attended public schools from primary school through university level.  My parents were beneficiaries of both Medicare and SS and I paid for the benefits they derived even though my contribution was far greater than theirs ever was.  I am happy to pay taxes, actually.  And I am dismayed when they're wantonly squandered.  I don't believe "gov't. is about spending".  I believe, as a taxpayer and voter that gov't. spending is OUR responsibility.  I'm not OK with how our taxes are presently being spent half a world away, nor am I OK with bolstering the Military Industrial Complex or allowing huge multi-national corporate "citizens" to skate by with minimal tax liability.  But you already know that.  ;) 

I agree that a lot of young people don't really understand the price of labor because they don't know how to perform it.  It's true.  As a girl, in Jr. High I was required to take Home Ec. (I hated it, wanted to take Wood Shop).  I HAD to learn how to make bread, plan menus, budget a weeks worth of meals with the local grocery stores advertisements, and sew.  I was required to learn how to MAKE THINGS and while I loathed the focus of what my sex required me to learn I did actually learn to appreciate the value of labor.  I think that's sadly missing in our present educational system.  My father was a plumber.  My brother was a natural mechanic (an artistic bent moved him into body work and higher end restoration work).  My mother was always doing something around the house... braiding or hooking rugs (dying her own wools), stripping paint and recaning chairs, making clothes, etc..  "Labor" was always in the forefront of my childhood, as was a level of respect for the knowledge required to deliver a professional result.  I am regularly stunned by the number of customers I have who have no clue whatsoever about how to even approach the most basic project!  They just "don't get it". 

However, I've also found that my knowledge of how to "do something" is now beginning to receive more respect and a willingness from my customers to pay for it!  The key has been to focus my marketing on those people who have the discretionary money to pay me what I must earn to make the living I expect to earn.  I don't play the, "Let's Make A Deal" game.  I have to make X amount and you have to pay X amount.  Pay it or get lost.  If I'm going to make "no" money I'd rather work in my garden or do chores.  My "minimum wage" days are long since gone! 

[byhammerandhand]

Asian Furniture:  Executive Summary:

• Make it as cheaply as possible.


• If you can save 5 cents on a piece by using inferior material, do it.


• Your factory labor was probably farming last month.


• Don't waste any wood -- knots, rough, wet - staple it in and pass it along.


• The factory that made this piece last month may not be the factory that makes it next month, and they not make it the same.  And the importer won't know there is a difference.


• The consumer is the quality assurance group.

Unless there is some economy of scale, what's the incentive to do more work for less?   If they're going to refer their friends, forget it.   "You want me to do this for less money so I can do even more work for less money???"   Most of the time they're blowing smoke.    You don't want to compete on price; you want to compete on quality.

There was something that happened this week due to a class action suit that merchants can charge a surcharge for credit card transactions.   The general consensus was that no one wanted to go first in a competitive environment.   And if it became the trend, many consumers would resort to checks (checques) or cash.

I have no idea about the Asian furniture? I don't think it's hit us yet. Can you explain a bit more.

Going back to price dropping, my favorite is when someone you've never dealt with rings up (maybe its a small scale manufacturer) and say 'if you do us a really good price there will be more' my reply is 'no I'll price this as I normally would then if there is more I'll review the price' do you really want to work for someone who wants to screw you to the floor. Those calls rarely come to anything and I'm glad.


Credit Cards: Like Sofadoc said some companies here add a surcharge to use a card and make that clear, maybe that's a way for smaller businesses to handle it?