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If you have a printed price list, but sometimes give breaks to some people, is that wrong?
I own a janitorial company. We specialize in floor care. This morning, I went out to bid a job. It was a retail store with vinyl composite tile in fair shape, but it needs a strip & wax job done. It is about 2,800 sf of tile. My price list says 1,500-3,000 sf is 52¢ per sq ft if I use 3 coats of 18.5% solids latex finish, the cheap stuff. A lot of people opt for the 21% solids latex finish or the 22% solids acrylic finish that wear better and look a little shinier. He wanted to upgrade to the 21% latex, which by the price list is 1.5¢ per sq ft more, no matter the size of the project.
So going by the price list, it should have been 53.5¢ times 2,800 sq ft, $1498. 3,000-5,000 sf is 49¢ per sq ft. Let's face it, 2,800 is a lot closer to 3,000 than it is to 1,500, but the price breaks have to be at a certain point. Had this been a 3,000 sq ft job, at 50.5¢ per sq ft, it would have been $1515. I split the difference and bid 52¢ per sq ft, making it $1456 instead of $1498.
Coming down $42 isn't that big of a deal. Makes the customer think he beat me. Possibly will get me the job. I lost a $2,500 job over $50 in October. I can't do that anymore. But I can't come over as desperate. If you had me bid on a job that was certainly worth $1498, but you beat me down $42 in price, would that cause you to lose respect for me? Would that make you think I make good deals and you will continue to use me?
If you went back 5 years, I had a lot more regular customers then. These days, everyone shops price and a 2-3% price difference will cost you customers. Heck, even 1% will. On the other hand, beating the next guy by 2-3% will gain customers. I had a really large project bid out to about $3,600 in August. Somebody else bid $3,550 based off my bid, so when they called to say my bid was beat by $50, I said I'd rebid for $3,475. I wouldn't bid a 3rd time, but I rebid about 1/3 of my bids. I got the work for $3,475. Yeah, that was too low, but it beats having nothing at all. I just don't like all this haggling and wonder if in the long run will it hurt me? Thanks.
You have a price list - use it. If your pricing is not competitive then revise it. Rebid/haggle if you want to be known as the cheapest service in town. You need to charge customers an amount that will be reasonably profitable for the business. Consider that you may be marketing your services to the wrong clientelle.4 months ago
Short answer to a question that you made way too long...
Your price list is exactly that - it is list price. It is fairly common in many industries to use a "multiplier" off list price. For example, you start at $100 list price, but if someone has a type of flooring that is easier to work on, you could charge a .97 multiplier or $97. That allows you to discount for customers with more potential and in certain cases where it is justified.