For over a dozen years,
NSPG has been providing the tools that allow contractors to
increase profits and minimize business hassles. With our
simple-to-use-tools, you can make being a business owner
what you always wanted to it be -
successful, profitable and rewarding.
 I Need to Charge How Much?
One of the
things we like to do at our Numbers Cruncher seminars is
to ask the attendees what they charge per hour.
After we collect the numbers, we select a volunteer from
the audience and run their actual numbers.
One of the first times we
did this exercise, we found a company that was charging
$75 per hour including a hoped for 5% profit.
After Crunching their Numbers, they agreed that their
profitable selling price was really $243.20/Hr including
a 25% profit. They immediately said that they
could not charge that much because they would lose half
of their customers.
Last month we addressed
this type of situation this way:
Perhaps the worst critic of your accurately calculated
price may be you. Many business owners Crunch
their Numbers and are immediately on the phone to tell
us that they could never charge that much. Their
customers would all leave them... Do you want to
cut your price and lose money on every job, or do you
want to charge a profitable rate and offer your customer
high quality service that matches your price??
At the seminar we took a
look at a few very simplified scenarios to see the cost of the worst
case scenario of losing customers due to a price
increase. Here's what we found.
Effect
of Price Change from $75/Hr to $243.20/Hr
|
|
$75/Hr |
|
$243.20/Hr |
|
Productive Hours |
3000 |
|
2250 |
1500 |
750 |
|
Productive Hour Loss % |
|
|
25% |
50% |
75% |
|
"Labor" Sales |
$225,000 |
|
$547,200 |
$364,800 |
$182,400 |
|
Material Sales |
$75,000 |
|
$56,250 |
$37,500 |
$18,750 |
|
Gross Sales |
$300,000 |
|
$603,450 |
$402,300 |
$201,150 |
|
|
|
|
|
|
|
|
Profit % |
5% |
|
25% |
25% |
25% |
|
Profit |
$15,000 |
|
$150,863 |
$100,575 |
$50,288 |
This chart illustrates the choice you have between
working maximum hours at low profit, or working
reasonable hours at a normal business profit level. As you can see from the
table above, even the worst case scenario (losing 75% of
your hours sold)
while charging a profitable rate is better than
the status quo. Most low charging companies can
make a reasonable profit while working far fewer hours.
Most of our Numbers Cruncher users who raise their
prices to profitable levels in their Flat Rate Price
Guides see very little customer loss. In fact,
many find that the higher level of service that they can
afford to provide wins them more business.
 If you control your costs and accurately Crunch your
Numbers, no one should question your prices.
You're in business to earn a living. The only sure
way to do that is to know your costs, add a reasonable
profit, and get to work. It's
your business, run it your way. Let
other people set their own prices too low and work
themselves out of business.
If you need a hand setting your
business numbers, email
Mike Conroy.
He can help you combine your current numbers with your
target company size, so you can set measurable
benchmarks and build your own right-sized profitable company.
Measure Monthly, Adjust Quarterly
& Achieve Annual Profit Goals
On-Line
Resources
 The
EPA has a
web site with a PDF document highlighting easy ways
to save water. This high quality document could be
a good sales tool for your technicians responding to
leaks and toilet service calls. Print it out, and
keep copies in all your trucks.
 Czech
pig farm becomes energy source. Talk about
thinking out of the box! Opportunities for new
technologies will continue to grow. Are you going
to take part in profitable new technologies?
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In This Issue |
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Phone 800 841-8542
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Freebie of
the Month
The freebie of the month is a web site or
product that we feel gives you some-thing worth looking
at or using that costs you nothing.
This month's
freebie may be practical for some of us who will be
heading out on vacation this summer, and may just
provide some entertainment for others.
This month's
freebie is a how-to from a site called
wikiHow.
This site is a collection of step by step instructions
for a wide range of everyday and unusual things.
One of our favorites is
how to erase marks off a dry erase board.
Here's one
of this month's featured articles.
How
to Escape
from a Bear
1.
Avoid the bear.
2. If you see a bear, turn around and
move away.
3. Stand tall even if the bear charges you.
4. Know your Bears.
5. Climb a tree (maybe).
6. Play Dead (sometimes).
7. Fight Back.
Before you
head out into the wild, go to
wikiHow and read the entire article.
nspginfo@nspgweb.com
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