The majority of most small businesses are specialty contractors. The top ten percent of these businesses make over 50k per year. In other words, most of these contractors are making less than 50k per year.
Top Mistake - Pricing Too Low
Many new contractors make the mistake of charging too low. They base their costs on what other people charge and reason if they are a little bit cheaper it won't hurt much and they'll get a lot of business. There are a lot of problems with this reasoning.
At Fair Market - Everybody Is Broke
I worked for a large electrical company. They would bid jobs to break even. They would look to barely cover their costs. Then, they would have people look for reasons for change orders. On the change orders, the cost would be bid much higher. No competing company can come in for such a small change. All the changes add up to enough money to keep the company going.
The only way a contractor can make money is to charge above average rates or come up with “change orders". The best way to do business is to be up front and honest. Most of all, know how to avoid bad customers; and that means most of them. It's the minority of customers who know that quality comes with a price. Try to work exclusively off referrals from the “right" areas.
People Don't Appreciate Low Prices
No matter what you charge, people think it's an arm and a leg. New contractors do a lot of favors and freebies to customers to earn good will. However, customers view it as their right because they are paying so much. Truth be told is that most of these contractors are close to broke. So, don't make the mistake of thinking people appreciate freebies.
Customers Want High Priced Goods
Charge the most and people will think you're the best. Instantly, everyone will want you to do their work. They will question your work a lot less because you must obviously know what you are doing at that high price. You also have a huge benefit of weeding out all the penny pinchers. You will only be left with customers that understand price isn't everything.
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