Tips to Raise Your Prices Without Losing Opportunities for Your Contracting Business

Sometimes, the cost of materials or labor goes up. You might have to raise prices or risk cutting your margins too low. With these ideas, you can position a new pricing scheme in a way that is least likely to frustrate repeat customers.

Evaluate the Needs of Your Customer Base

If you want to deliver your message in the best way, you need to know what your demographic wants to hear. Contractors whose customer base needs to keep prices as low as possible might need more options. That way, they can stick to their tighter budgets without having to look elsewhere. This could also be an opportunity for you to evaluate your target demographic. If you can improve the scale or scope of your projects to accommodate a group with more money to spend, increasing your prices may be easier to accomplish.

Give Details About Price Changes

People who are used to using a particular service at a predictable rate may balk at the rise in prices. If you provide an honest explanation of your reasoning, they could be more understanding. When the overall cost increase results from a shortage of supplies or qualified labor, people can appreciate that it may lead to a temporary rise in your expenses. Most customers will realize that you can’t repeatedly lose money on your projects and stay in business. The more transparent you can be about your pricing strategy, the better your existing clients will be able to understand your plans.

Mention Upgrades to Products or Services

On occasion, you might have to change your costs to accommodate better products or higher quality services that you can offer to your customers. In this case, you want to emphasize how this benefits them. If the new pricing allows you to offer a more complete package, your clients can get more work done by going through you. That saves them time and hassle, which is often worth the extra money. Detailing quality process improvements that help you to keep pace with industry standards will show potential customers that you are working hard to give them the best.

Consider a Tiered Pricing Strategy

If it’s time to rethink your pricing scheme, you may discover a great opportunity to think bigger about how you package your products and services. Many people start out with a fairly limited list of things they can do for homeowners, businesses or developers. As you grow and expand your line, you can start to reorganize the options your customers have. If you have the flexibility, think about offering a variety of packages at different price points. This will help you keep the buyers with the tight budgets while reaching out to more lucrative clients.

Time the Increase Appropriately

The right timing to change aspects of your business is crucial. You want to roll out your new prices at a good interval that helps you keep people coming back. Try these tips:

• Announce the price increase at a time when your business is generally in demand
• Give loyal customers time to select upgrades at the old prices
• Make sure you raise expenses enough to cover upcoming cost increases

Putting the pricing scheme into effect with enough time for people to adjust will make it easier to stay busy during the transition.

Emphasize Value

In the early years of your contracting business, it can be tempting to market your services with low prices. After all, even if the lowest bid isn’t necessarily the best, some customers will prefer companies that underbid everyone else. However, this approach can make it harder to keep a functional profit margin that allows you to run a smooth business. Think about how you justify your costs to consumers, and avoid making it seem like you care more about low prices than quality work. Customers who want a good value are often willing to invest a little more to get it. They will appreciate you showing how you can give it to them.

Making fair profits in your contracting business means that you have to increase your prices sometimes. These tips can make it easier. To start building your contracting business, visit CSLS today!