Imagine this scenario: A homeowner hires your company to do a job, and you quote them a price—roughly $1,000 when all is said and done. The homeowner agrees, and you begin your work.
As you get into it, though, you realize that the scope of the project is far bigger than you first anticipated. Surprises come up, and costs spiral out of control. You approach the homeowner and admit that the project has changed; now, you say, you’ll need to charge $2,000 to cover those “surprises.”
The homeowner is likely to respond in one of two ways. It’s possible that he or she will be furious that you so badly misjudged the project. Or it’s possible that the homeowner will grudgingly agree, acknowledging that, in home improvement, these things “just happen”
Neither of these scenarios is actually all that positive. While it’s true that surprises can happen, you never want to so badly underestimate the cost of a job. Ideally, you always want your customers to feel like you steered them straight and made good on your promises.
What Causes On-the-Job Surprises?
The question is, how can you avoid these unwelcome scenarios?
While you certainly can’t prevent on-the-job surprises, you can prepare for them a little better. To do so, understand what causes those unanticipated spikes in price.
The first cause is that you simply didn’t price the job right in the first place. This often happens when you are trying to make your price as low as possible in order to close the sale; if you trim your margins and don’t leave any room for error, however, you’re not going to generate any profit from the job—and should anything unexpected arise, you may very well wind up having to go back to the homeowner and increase your price.
The second reason why you might run into problems is that your estimator didn’t fully think things through—didn’t go over every step of the process and every possible contingency before offering a quote. To provide a reasonable estimate, it’s important to be thorough, and to entertain all possible outcomes.
It’s All About Pricing
As is so often the case, it all comes back to pricing. Service trade professionals shouldn’t be afraid to price their jobs to ensure profitability—no matter the nature of the project.
One solution that more and more contractors and service professionals are embracing is flat-rate pricing—wherein you offer the client a fixed price that accounts for any potential “surprises,” rather than an open-ended price that hinges on the time and materials used. A vast majority of homeowners say they prefer the fixed approach because it removes any fear of a last-minute spike in their bill. It also shifts the perceived risk from the homeowner to the contractor, and allows you to come across as more up-front, more trustworthy, and more authoritative.
The bottom line? With smart pricing, you can keep yourself out of scenarios where you have to change your estimate at the last minute; and, you can prevent your clients from stressing out as the repair time lengthens.
That’s something our team can coach you through. Contractor in Charge helps service trade entrepreneurs to price smartly and ensure they are making profits. We’d love to consult with you today, and to show you the untapped potential in your own business. Reach out to Contractor in Charge to learn more!