If you’re a contractor that is looking to raise your markup, you probably fall under one of two categories. The first is the slow and steady increase of pricing over time. This is the safest option because you’re not alienating your client base, however, how do you know when to stop? It’s not a very accurate means of getting a feel for the market. The second, is the contractor who doesn’t really calculate increases and just decides on new prices. Then, when it’s time to collect money on a job, they lack confidence and are often negotiated down because they truly can’t explain where the numbers came from.
Below are the steps to calculating appropriate markups you can confidently stand behind in any transaction.
- Decide it’s time to stop guessing about how much you should charge to be profitable
- Take the time to calculate the markup you need to stay in the green, support your lifestyle and retire at a reasonable age.
- Always keep records of your direct costs to build projects and then use those figures combined with the markup you’ve already calculated to establish your selling point.
- Confidently offer your price to customers and stand by it, knowing your skills and due diligence of calculating prices has not been random.
- If every time you try to sell something your price drops, accept the fact that you may need better sales training. There are all kinds of sales courses online that can help you.
- Be open to finding a new market to work in if your current market isn’t willing to pay for the prices you’ve offered.