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Why You Should NEVER Compete on Price
Written by James Dewane
I was talking to an electrician a little while ago, who was new to the business and desperate to find out what others were charging in the industry. I asked him why he wanted to know – and he looked at me incredulously and said – “SO I KNOW WHAT TO CHARGE OF COURSE!”
That is absolutely NOT the way to decide what to charge. Why? Because once you compete on price then there is no way back.

The truth is, there will ALWAYS be someone who will be cheaper than you. And if you start off competing on price, you'll have no choice but to continue to drop your price. How low? As low as you can to win the business? Possibly. And if you do win the business then you are going to be a busy fool.

So the question you may need to ask yourself is; do you want to be ‘the cheapest’?

I'm guessing not otherwise you'll always be in business to 'just' make ends meet so lets take a look at just how the price you charge not only pays for the value you give but also keeps your business flowing

1: Start with how much you want to earn a year.
2: How many hours you want to work
3: How many jobs / customers you want to deal with a
4: What kind of work you want to be doing.

Once you know what that above is – then you know how much profit per hour you need to build in. There is a formula for working this out that I teach my students. You can then price the job by the costs PLUS your margin, which is the bit many tradesmen forget to do. If you are not making a profit you may as well be employed by someone else in a job.

Ah – but what if other people are cheaper – you might be thinking. Well, I have news for you – there are always going to be people who are cheaper than you, and that’s not your business or your problem. The market is big enough for those guys. There will always be clients who want the cheapest possible job. And trust me, they are generally the clients who will cause you the most hassle. If a client goes with someone cheaper then either you haven’t sold the value of what you do well enough – or they were never your client anyway.

Do you want to have a reputation for being the cheapest anyway? NO. Because that means either you are doing shoddy work – which won’t help you grow your business – OR you are doing great work and not charging enough to even put diesel in your van. All your customers will be delighted but your family won’t and neither will you when you work hard all week and have nothing to show for it.

So – decide on your own value. Part of what electricians learn in my membership site is expert positioning and what I mean by that is, they learn how to be seen as the expert in their field and their geographic area, which builds credibility and prevents you having to compete on price.

Tell your customers about how well they will be looked after. And then stick to your guns on price. And as I said – if they don’t go for it, then go find some new customers who are more concerned about value and quality and safety, than they are about price. If you need some help with that, email me and I’ll give you a free marketing assessment where you will get some tips from me that you can implement tomorrow in your business.
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About The Author:
James Dewane


I am an apprentice served award-winning Electrician with over 25 years experience.

I also hold a Degree in Business Management, I speak and conduct workshops on the subject of local marketing, specifically for the trades, and have written an Amazon best selling Book on the Subject The S.P.A.R.K.S Blueprint to Marketing... I have a passion for local marketing.
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