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Underpricing

I recently started working for myself following a 2 year college course, doing garden maintenance. I am developing a good name quite quickly, helped by my families popular nursery in the area I am working, but the course I completed never really taught us how to price jobs and how to get the prices across as reasonable to customers.

I recently spoke to an arbourist who cut hedges and we compared what we charge. I quoted £85 for a hedge that he said he would price at £300 plus. How can I get these kinds of higher prices across to my customers, most of which are quite well off, without them thinking that I am extortionate, as I'm sure most people expect almost all work to be a lot cheaper than it inevitably has to be for us to cover our costs.

Would appreciate any help,
Thanks,
Tom

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  • PRO

    Hi Tom, pricing is always a common thread on here.

    As to how to get your prices across as reasonable to your customers, I would have a look at how you present yourself, your business, paperwork etc.

    If everything is in good form and your have all the correct paperwork and licences etc, they you could (and should) command a good rate.

    A lot of people honestly don't know how much a job will to have carried out professionally, this is where part of the job is being a salesman as well...

    Happy to discuss in more detail in 'The Hub' or on chat, but like many people, I don't go into pricing specifics on the open forum.

  • PRO

    Exactly!
    Adam Pilgrim said:

    Hi Tom, pricing is always a common thread on here.

    As to how to get your prices across as reasonable to your customers, I would have a look at how you present yourself, your business, paperwork etc.

    If everything is in good form and your have all the correct paperwork and licences etc, they you could (and should) command a good rate.

    A lot of people honestly don't know how much a job will to have carried out professionally, this is where part of the job is being a salesman as well...

    Happy to discuss in more detail in 'The Hub' or on chat, but like many people, I don't go into pricing specifics on the open forum.

  • PRO

    Just to add; there is a wealth of information worth reading first on this topic on the open forum (via the Google Search box, top right) or for more specifics then The Hub is a valuable resource. It's a major topic, covered in many ways by many people, so digest some of the recommendations and ask further questions.

  • If you had quoted a much higher price in the first place, you may got the job anyway. You can't blame your customers if you give them a low quote in the first place just to get the work.

    I business, it is far better to win a few high priced contracts than to win a lot of low paid contracts. Why run around like a busy fool when you can make good money doing half the amount of work. It's all down to marketing!

  • As Adrian mentioned briefly above, it's all in the marketing, as is absolutely everything else in business. I will get round to starting a proper marketing thread on here (at some point) because an awful lot of questions seem to be asked on here where the answer is very clearly, proper strategic marketing.

  • Work out your prices and stick to them just like a car showroom does.



    Lets presume that you walk into a Range Rover car sales showroom and you see a nice gleaming top of the Range Rover for £69,000. You go over to the sales person and say "I would like to buy that car".

    Does the salesman say:-
    (a) "That will be £69,000 Sir. Do you want to pay cash or on HP".
    (b) or does he say "You only look as though you can afford £3000, so give us £3000 and it's all yours".

    If you think (a) is right, then that is exactly what you have to do. Stick to your prices and no lowballing.

    If you think (b) is right, then perhaps you should seriously think about becoming a Monk.


    Business is all about marketing and finance. Read books written by professors and you can't go wrong (unless you can't read).
  • I've been doing this only a short time and I'm quite young my opionion is if you want to quote a higher price you must show your worth the extra price but also be prepared for customers to refuse you or not get back to you.

    I've only just recently started getting booked up at least a month or two in advance meaning I can go to jobs thinking I'll price what it's worth not what will win the job no if or buts it hard honestly.
  • Adrian.

    The point you are missing is that the marketing managers and directors at Range Rover have put a lot of time, effort and money into researching the optimum price for the Range Rover you are looking at. They have actually spend a lot of time working out what people will want to pay for the product, and also tailoring the product to the most acceptable price. All the sales person has to do is sell it for the price he has been told to.

    The sales person is not involved in market or marketing research, R & D, tooling, manufacturing optimisation, or price setting. He just gets told what to charge by his superiors. Small business doesn't work like that.

    This is why I mentioned earlier that a little marketing knowledge is a dangerous thing. You can't just read a few books by Kotler and Porter, and expect to be able to understand the whole process.






    Adrian Noble said:
    Work out your prices and stick to them just like a car showroom does.



    Lets presume that you walk into a Range Rover car sales showroom and you see a nice gleaming top of the Range Rover for £69,000. You go over to the sales person and say "I would like to buy that car".

    Does the salesman say:-
    (a) "That will be £69,000 Sir. Do you want to pay cash or on HP".
    (b) or does he say "You only look as though you can afford £3000, so give us £3000 and it's all yours".

    If you think (a) is right, then that is exactly what you have to do. Stick to your prices and no lowballing.

    If you think (b) is right, then perhaps you should seriously think about becoming a Monk.


    Business is all about marketing and finance. Read books written by professors and you can't go wrong (unless you can't read).
  • Can I just say Tom, don't believe everything people tell you about what they charge or earn. There's a lot of twaddle spoken and written about charges etc.

    You will soon learn from experience, if you quoted £85 and you cleared the job in say 3 hours, then you've done OK and your arbourist friend is either overcharging or trying to pull the wool over your eyes. However, if you spent all day and £20 to tip the cuttings........well, you would have learned a lesson not to be forgotten.....I hope!! Only you know the speed you can work and from that you can gradually get your pricing to where it should be.

    As has been mentioned above, there is a wealth of info on this site - most of it is very useful, but my view for a new start-up is to get as many jobs under your belt in the first year as you can. If it means going in a bit low, just do it! A years practical experience, picking up contacts will give you a feel for the work and dealing with the customer and that will be worth more than you could ever learn from any book.

  • PRO

    I agree very much with Colin i've found from my experience you can only learn by gaining the experience and knowing how long jobs will take you so then you can gauge in your head a fair price

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