If you are a painting contractor, or in fact any kind of contractor, you might have found yourself asking one of the most common questions in the trade: "What's the going rate for this service?" While it might seem like a logical question to ask, it's one that could lead you down the path to financial hardship. If you're seeking to escape this rat race, it's crucial to stop concerning yourself with the 'going rate' in your area. Here's why:
1. Your Numbers are Your Numbers
The first reason that charging the going rate could be detrimental to your business lies in the fact that your numbers are unique to you. You need to consider your own income goals, debt situation, overhead costs, and production rates.
Too often, contractors ask questions like "What's the going rate for painting a house?" or "What's the going rate for installing a door?" But the only rate that truly matters is the one that will allow you to achieve at least a 30% gross profit, while delivering a high-quality, safe service to your clients.
Your overhead might be half or twice that of another contractor. It might take your crew twice as long to complete a job. These are your numbers and they are what should inform your pricing. The more you understand your own numbers, the better positioned you'll be to avoid financial struggles.
2. Build the Brand You Want
The second reason to ignore the going rate is to ensure that you're pricing your work in a way that supports the brand you want to build. If your prices are too low, you might send the wrong message, especially to high-end clients.
First impressions count. If you haven't invested in your company's identity, such as your logo, website, social media presence, and uniforms, potential high-end clients might perceive that you're not at their level. Low prices can also lead clients to think there must be something wrong, that you're cutting corners, or providing an inferior service.
Your pricing needs to attract the type of customers you want and reflect the brand you're building. You can't position yourself as both high-end and affordable. It doesn't work. What does work is providing high value and communicating this effectively to your target audience.
3. Most Contractors Don't Know Their Numbers
The third and perhaps most important reason to ignore the going rate is that many contractors are wrong about their own numbers. A shocking 90% of home improvement contractors don't fully understand their numbers.
Many contractors are just scraping by. So why would you base your prices on what these struggling contractors are charging?
If you want to build a successful, sustainable business, the last thing you need to be doing is asking other struggling contractors what the going rate is. This mindset keeps you in the financial gutter.
To summarize, it's essential to stop concerning yourself with the going rate and instead focus on your own numbers, building your brand, and understanding that many contractors don't have a clear grasp of their own financial situation.
Joining contractor-focused groups or forums can provide a wealth of knowledge, support, and advice. Sharing experiences and challenges with others can often help you see your own situation more clearly.
Remember, you are in control of your business, and the first step to achieving success is taking responsibility for your own numbers and building a brand that reflects your values and goals. Your future success depends on it.