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Old 01-10-2010, 07:26 PM
LetThereBeeLight LetThereBeeLight is offline
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Dropping price to get jobs

Have you guys had to lower your selling prices to get jobs this year? Here on the east coast it\\\\\\\'s been slow. Not many projects and a lot of competition. How are you faring?
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Old 01-10-2010, 09:24 PM
RLI Electric RLI Electric is offline
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I haven't dropped prices yet, although I am not doing anything with the frozen ground right now. Where on the east coast are you?
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Old 01-10-2010, 10:25 PM
INTEGRA Bespoke Lighting INTEGRA Bespoke Lighting is offline
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I would advise you to do a lot of other things before you lower your prices. There are many many strategies to winning jobs in highly competitive market conditions. Lowering your prices would be one of the very last things I would do.

Try offering "free" upgrades.

Try including "free" control solutions

Introduce the concept of actually being paid for your design, specification and procurement time. Then if you need a bargaining chip you can discount these fees away.

Introduce free one (or two) year service agreements with every new installation.

The list of ideas could go on for a long time. Bottom line is to do more, offer more and make your clients understand that they are getting more with you at your current price than the competition is offering.

If you do choose to lower your prices be aware that you will be pulling the entire market down with you and making your return to normal prices that much harder in the future. A race to the bottom. The next thing you know you will be reducing the quality and cost of your components in order to salvage your profitability. It is a vicious spiral.
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Old 01-10-2010, 11:20 PM
emby emby is offline
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Quote:
Originally Posted by INTEGRA Works Lighting View Post
I would advise you to do a lot of other things before you lower your prices. There are many many strategies to winning jobs in highly competitive market conditions. Lowering your prices would be one of the very last things I would do.

Try offering "free" upgrades.

Try including "free" control solutions

Introduce the concept of actually being paid for your design, specification and procurement time. Then if you need a bargaining chip you can discount these fees away.

Introduce free one (or two) year service agreements with every new installation.

The list of ideas could go on for a long time. Bottom line is to do more, offer more and make your clients understand that they are getting more with you at your current price than the competition is offering.

If you do choose to lower your prices be aware that you will be pulling the entire market down with you and making your return to normal prices that much harder in the future. A race to the bottom. The next thing you know you will be reducing the quality and cost of your components in order to salvage your profitability. It is a vicious spiral.
AWSOME ADVICE JAMES ! ! !

Ken
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Old 01-11-2010, 12:14 AM
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extlights extlights is offline
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I'm not so sure that we've really dropped our prices, however over the past couple of years I'd say that we were able to be more competitive with the "cheaper" guys. Once reason is that we're able to do business cheaper.

We've worked really hard to eliminate huge overhead costs ( Trucks payed for, credit cards at zero balances, business loan and shop payed off) and by doing that we've been able to make it quite easily without any struggles in this down economy.
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Old 01-11-2010, 12:56 AM
David Gretzmier David Gretzmier is offline
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I am thinking of ways to be available to more folks and let more people know I am out there. I have had tons of people still tell me that they did not know someone does what I do. I plan to advertise more in 2010, one to create awareness of a need, and 2, to be in front of folks more so when they make that decision I am the brand they think of.
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Old 01-11-2010, 01:20 AM
Stephen M. Stephen M. is offline
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It is possible to "drop your price" and make more per hour by quoting a job price.

One of my employees was sick, so I became the substitute worker on the route in November. As we were finishing one of the accounts, a neighbor lady asked me what I would charge per hour to dig out some mugo pines so her 85 year old husband wouldn't do it. I said $35/man hour and she thought it too high, and "would you reconsider the price"? I said that the lowest I could go was $30/man hour.

I looked at the job and quoted $240 labor + $60 for disposal, or $300 + tax and that would include disposal of the debris. The quote was accepted. (the disposal site is free, but I charge what I would have to pay at the County site.)

A few days later, my 2 employees loaded the debris plus more than what I saw when pricing the work and dug out the mugo pine stumps. On site, it was $50/man hour. but with disposal figured in, it dropped to $40/man hour gross.

Not bad for "dropping" my per hour price! I just loaded the back end of the deal to cover my self just in case it took my employee longer than he aticipated.

Last edited by Stephen M.; 01-11-2010 at 01:29 AM.
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Old 01-11-2010, 10:11 AM
Alan B Alan B is offline
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Quote:
Originally Posted by LetThereBeeLight View Post
Have you guys had to lower your selling prices to get jobs this year? Here on the east coast it\\\\\\\'s been slow. Not many projects and a lot of competition. How are you faring?
Every area is different, but my customers have been very successful in this competitive time using one specific technique-- offering far superior materials (solid cat brass, heavy fixtures with higher grade components) for equal or less than their competitors are offering aluminum.

By actually putting one of our products into the customers hand, they can see and feel the difference. They immediately know they are getting a high quality product and it negates much of the pressure to match competitors pricing.

Lastly if your competitors or you already offer brass, buying from us cuts most contractors supply costs in about half which either gives them higher margins or gives them the flexibility to match a price easily if they have to.

Although this has been said, it can not be repeated enough-- never sell a job by the fixture. This is the number I come across in contractor marketing. Don't let the customer lead the negotiation, design or fixture choice. Establish yourself as a professional, show them the quality of 2 of your fixtures and let them know you will be giving them a professional result. I you have to provide options give packages: e.g. X for the works (the whole yard), Y for for the front and partial sides, and Z for a little as possible to get a pro result but never mention fixture price. Let them know you will put in what is necessary to do it right.


Sincerely,

Alan
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Last edited by Alan B; 01-11-2010 at 10:19 AM.
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Old 01-11-2010, 10:30 AM
INTEGRA Bespoke Lighting INTEGRA Bespoke Lighting is offline
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Originally Posted by Gr1ffin View Post
-- never sell a job by the fixture. This is the number I come across in contractor marketing. Don't let the customer lead the negotiation, design or fixture choice. Establish yourself as a professional, show them the quality of 2 of your fixtures and let them know you will be giving them a professional result. I you have to provide options give packages: e.g. X for the works (the whole yard), Y for for the front and partial sides, and Z for a little as possible to get a pro result but never mention fixture price. Let them know you will put in what is necessary to do it right.
I agree with this 100%.

I have never been a fan of per fixture pricing. I compare per fixture pricing with a carpentry contractor pricing a deck out by the board. There is so much more that goes into a professional lighting system than most people would understand or acknowledge, done right they are complex systems worth much more than the sum of their parts. Pricing by the fixture affixes little to no value to your experience, skill, craftsmanship, design abilities, operation expenses and other system compenents. Per fixture pricing may seem like a quick and simple pricing strategy, which is fine if you are installing quick and simple lighting systems I guess, but when you get into pro-grade systems, the per fixture route will quickly have you racing to the bottom.
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Old 01-11-2010, 12:28 PM
steveparrott steveparrott is offline
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I agree with all this good advice, especially about maintaining high standards with regard to quality of products and service.

A couple excellent articles on the subject (overcoming price objections):

http://trustedadvisor.com/cgreen.art...ce-is-Too-High

http://trustedadvisor.com/cgreen.art...and-Psychology
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