bradleyelectric
Senior Member
- Location
- forest hill, md
This is reprinted from Randall Hilton ebiz newletter
A few weeks ago I had a nice conversation with a wonderful client of mine. This husband/wife team has high moral standards, believing in honesty, diligence and great service. As you probably already assume, I've been coaching them to stick to their guns on pricing. They realize that growing a business is hard work and rife with expenses so the responsible thing to do is to calculate a selling price based upon the numbers. In other words, they calculated a profitable selling price based upon what it costs to deliver the service.
During our conversation, they mentioned another plumbing contractor in the area. This contractor is also a very nice person. He cares about people, he cares about fairness and he certainly cares about his customers. He based his pricing on the moral position of keeping the price as affordable as possible. His pricing method is to offer a price that he thinks is affordable, then figure out a way to squeeze all his costs out of that price.
Unfortunately, this excellent plumber had to give up his practice and get a real job. You see, it did not matter what sort of goodness was in his heart. It didn't matter that he wanted to be a blessing to his clientele. Nor did it matter that he was dependable and always did a good job. What this contractor learned was that there's no way to put "good feelings" into the deposit envelope at the bank. That means there's no way he can go to the ATM and get some cash to pay bills. This also means that all those customers he cared so much about, all those customers whom he served so diligently, ended up going to another contractor.
Fortunately for his customers, my client bought his list. Those customers will still get integrity, quality and dependability. It's just going to cost them more whenever they need service.
The moral of this tale of two plumbers: A desire to do the right thing does not grant us immunity to the laws of business.
Based on that article and your knowledge of your business do you think your customers would be served better by going by going rate or by a rate set by business principles?
A few weeks ago I had a nice conversation with a wonderful client of mine. This husband/wife team has high moral standards, believing in honesty, diligence and great service. As you probably already assume, I've been coaching them to stick to their guns on pricing. They realize that growing a business is hard work and rife with expenses so the responsible thing to do is to calculate a selling price based upon the numbers. In other words, they calculated a profitable selling price based upon what it costs to deliver the service.
During our conversation, they mentioned another plumbing contractor in the area. This contractor is also a very nice person. He cares about people, he cares about fairness and he certainly cares about his customers. He based his pricing on the moral position of keeping the price as affordable as possible. His pricing method is to offer a price that he thinks is affordable, then figure out a way to squeeze all his costs out of that price.
Unfortunately, this excellent plumber had to give up his practice and get a real job. You see, it did not matter what sort of goodness was in his heart. It didn't matter that he wanted to be a blessing to his clientele. Nor did it matter that he was dependable and always did a good job. What this contractor learned was that there's no way to put "good feelings" into the deposit envelope at the bank. That means there's no way he can go to the ATM and get some cash to pay bills. This also means that all those customers he cared so much about, all those customers whom he served so diligently, ended up going to another contractor.
Fortunately for his customers, my client bought his list. Those customers will still get integrity, quality and dependability. It's just going to cost them more whenever they need service.
The moral of this tale of two plumbers: A desire to do the right thing does not grant us immunity to the laws of business.
Based on that article and your knowledge of your business do you think your customers would be served better by going by going rate or by a rate set by business principles?