Knowing how to price when you're first starting out, or even when you are an established contracting business, can be difficult and frustrating.
The most important thing about pricing is to strike the proper balance between your clients' enthusiasm for working with you and covering your own costs, by ensuring that you are charging what you are worth.
And I find that many women struggle with that last part because we're naturally inclined to undercharge. It seems like women underprice because we don't want to scare away potential clients or don't see the value in what we're offering.
That’s why in this blog post I will share some common mistakes made by female contractors when charging their prices — so that YOU can avoid them!
Contractors often undercharge simply because they have no idea what running their business costs.
This happens all the time, and it can be challenging trying to get it under control.
And I totally understand why it happens. It's tough to run a business! You get pulled in a thousand different directions. You're trying to run the business and serve your clients, keep your team on track, run your household, and the list goes on…
Who's got time to run numbers amidst all of this?
And let's face it — the numbers in your business are tedious.
It's not fun to sit down and calculate your overhead, track your inventory or figure out how much you spent last month on supplies.
But you can not run a profitable business if you don't know your costs.
When you don't know your true costs, you are basing your pricing decisions on incomplete information. So if you are not tracking your numbers very well, that should be first on your to-do list.
If you don’t know where to start, check out this video where I teach you how to calculate your break-even point.
You should have a good understanding of your own numbers, but this is not everyone's strength. Meeting with a good bookkeeper can help you get on track. It's an investment that will pay itself off, I promise.
It's easy to let our passion for our craft override everything else.
You might have gotten into your trade because you enjoyed the actual work of doing the home service itself, whether it's painting, plumbing, cleaning, etc.
It might be your absolute favorite part, and you don't really mind working for less money if it means getting to do the work that makes you feel good. Maybe it doesn't feel like work if you are helping people and making their lives better.
But, you CAN NOT sustain yourself if you're not charging enough to cover your costs and turn a profit.
Eventually, it will lead to burnout, or your business will never be more than a side hustle. It will never lead to the freedom or success you're looking for.
Business ownership is hard. It’s stressful. And if you don't plan to build up a business that you can someday sell and retire on OR pass on as a multi-generational legacy for your family, then it's probably not worth it; you shouldn’t try to run a business.
So even if you really enjoy what you do and are passionate about helping people, you still have to know your numbers, what your break-even point is, and when you start turning a profit.
You can't continue to serve people and help them if you run yourself out of business or hit burnout status.
And that means you have to stop thinking of your business as a hobby or a favor for people. Instead, start tracking all of your costs and then charge accordingly.
Under-confident business owners tend to set prices they feel comfortable with, but they probably undervalue their time, knowledge, and effort.
You might be hesitant or scared to charge more because you'll miss out on work or lose out on opportunities.
But, fewer clients at a higher price point is easier to deliver on. There's less to manage, the fulfillment is simpler, and you aren't constantly chasing your tail.
This means you can create a balance and establish healthy boundaries that allow you to give your best work and be really present for your clients — while still getting enough hours in the day to focus on growing your business or taking care of your family.
But then, again, knowing your costs comes into play.
When you don't know your numbers, and someone questions your pricing, or tries to haggle, or doesn't move forward on the project, you probably start thinking:
“I must have got it wrong. Maybe I'm too expensive. Or I'm coming across as greedy.”
But if you've established your price based on the accuracy of your numbers, when your client says, “that's too expensive,” you can confidently say no and explain why this price is reasonable.
You're NOT being greedy.
You are charging what you have to to stay in business and reinvest in the growth of your company.
And “profit” doesn't just mean money lining your pockets.
It means having the financial advantage of adding new features, software, tools or equipment, team members that allow you to deliver a better experience and more value to your clients. Besides, you have to have money in the bank to weather the storms that every business inevitably faces.
If you come into that sales conversation already knowing where your business stands and why you charge the way you do, you will have already overcome that confidence issue because your mind will be in the right place.
You'll know why you've set the price that you have, and you will be able to make the client understand upfront the massive value your services offer them.
So that when they question it, you know the pricing is fair for the kind of work you’re doing and the value you are delivering.
Belief is one of the most important aspects, and you may need to reframe your mindset about pricing. The most important thing to consider when it comes to pricing is how confident you are in the value you're providing your clients.
You have to believe in what you offer. It's really hard to sell something you don't believe in.
And if you do believe in your services, then consider the cost that people would incur if they did not work with you.
What is the cost of that problem to your client?
What do you save them from, or what can you give them back in terms of time, stress, energy, or even money by working with you?
What feeling, what state of relief or happiness or excitement or peace of mind will they have when the job is done? And what is that worth to them?
This is the outcome — THE TRANSFORMATION — and it's tied to the value that you are selling.
So think about what the cost of the problem is — the thing that keeps your client up at night — and then sell the solution to that problem instead of just your time per hour.
If you know what it costs them NOT to hire you, you'll stop charging based simply on the time or materials. You bring so much more to the table than that.
And when it comes to charging based solely on time — someone who is more experienced, more skilled, and has access to better resources can charge more because they get the job done efficiently and with greater results (not in spite of that!).
If you could give someone the transformation they desire faster than expected, wouldn't they want that?
The right people will pay more for your efficiency and expertise rather than just time because it gets them a better solution to their problem faster.
There’s a lot more than just time and materials that goes into your pricing. And you can offer them that perfect solution only if you are paid fairly.
If you want to start commanding the rates you deserve as a female contractor, you need to:
Understand your costs
Stop justifying lower prices because you’re passionate about your work
Charge your rates based on your skills and knowledge
And be confident in the value of your services
If you start implementing all of this, charging your worth as a female contractor will become second nature to you
Like I’ve mentioned again and again throughout this article; the best way to start pricing correctly is by tracking all the right numbers in your business.
I have created a guide that will show you just that! It’s the Best Reports to Track for Home Service in 2022.
So if you want to feel in control and you want to know exactly what is going on in your business, grab it HERE.