THE PRICE IS RIGHT
Perception backed by substance is a winning combination in marketing your business. Whether you call it “spin” or your “marketing effort,” your intent is to favorably impress potential clients with who you are and what you can offer them. You need to distribute your message to all potential customers in your marketing area. The spin is what we hear, but it has to be backed by a good product or service if your business is going to grow. Think about spin in the political sense. I love to follow politics and the spin that is so ingrained in political strategy. Hypothetically speaking, if a candidate builds up a campaign of promises but fails to deliver, do you think his or her chances for re-election are any good? What about your campaign of promises to clients? Do you deliver in an effort to gain return business, or do you try to turn a quick buck for the short term and say to hell with the long-term relationship? No doubt you are solidly committed to your profession and go for the return business. Which brings us to the focus of this issue: running your business.
There's nothing wrong with turning a quick buck, as long as your client is happy with the service you provide for what he considers the right price. Sounds simple, but it ain't so. When I was about 11 years old, I approached my rather stingy neighbor about mowing his lawn. It was about an acre, and he said he'd give me 25 cents to mow the thing. I said no way, that I wouldn't mow it for anything less than a dollar. OK, so I didn't have much overhead back then, and I wasn't that sophisticated in my estimating technique. But I knew that my time was worth more than that.
The real challenge in bidding is to know just how much revenue you can squeeze out of a project to cover your costs and make a profit while not sacrificing the service you provide. Before setting your price, you must thoroughly identify all associated costs you will incur on the job. These include all direct costs, such as labor, plant materials and supplies used on the job. But you can't forget the often-hidden indirect costs, such as depreciation, insurance, employee benefits and taxes. You also must consider overhead cost, such as rent, property taxes, advertising and insurance on buildings.
Identifying your costs, setting your price to make a fair profit and making your client happy with your service separates you from the low-ballers in for the short-term. Phil Nilsson uncovers the “Cost of Doing Business” in this issue's opening feature, page 12.
Want to use this article? Click here for options!
© 2014 Penton Media Inc.