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Pricing Mistake Business

Don’t Make This Mistake When Pricing Your Services

In this article I’m going to share the #1 biggest pricing mistake nearly all new service pros make.

So last week my brother mentioned he was thinking of starting a lawn care business.

Naturally, just like anybody who’s never started a business, he has certain beliefs and ideas on how to get one going. Some of them really good, and others will guarantee he loses money.

One thing he said in particular that really popped out to me was that the way he figured it, he could charge just a little less than the other lawn care companies, and as a result, get a flood customers to jumpstart his business.

Basically, he was going to use low prices as his primary marketing strategy.

Now, I love my brother. He’s a great guy and he’s one of the smarter people I know. But dammit, this is one of the dumbest ways to approach business!

And I’m not writing this article to call out my brother. I’m writing it because I see this mistake made all the time, with almost every new handyman, consultant, freelancer, or anybody else offering a service as a business.

For some reason, everybody who wants to start a business thinks that pricing is the best marketing strategy. I don’t know where this comes from. Maybe from huge companies like Wal-Mart, Home Depot, or Costco – all companies that were built on low prices.

Or, maybe from the endless commercials advertising discounts or specials to sell more crap.

Whatever the culprit is, we’re convinced as a society that pricing is the best marketing strategy. And, when you’re selling the same shit as everybody else, then low-prices can be a great strategy if you can make it work. But for 99% of businesses, it’s a terrible idea that will guarantee you make less money.

Here’s Why Underbidding Your Competitors Is Dumb

#1 – You probably aren’t more efficient

There’s only one way to make a solid profit and charge less than the competition and that’s to have a breakthrough in efficiency. Unless you’ve figured out a way to provide the same service with fewer resources (time, money, tools, materials, people), then charging less only means one thing – making less. And since you’re just getting started, you’re probably far less efficient than the competition is, which means you’ll make even less money.

Amazon can offer 2-day free shipping because they’ve got a huge infrastructure and ship a ton of packages.

Wal-Mart can sell a gallon of Vinegar for a dollar because they move so much volume that they get special pricing from vendors and only need to make a few cents per product to generate billions in profits. These companies can rely on razor thin margins.

You and I? We’re just regular dudes with a garage full of tools and knack for fixing things. We need higher margins in order to run a sustainable business.

#2 – Money isn’t the only factor customers consider

If every handyman in the world offered the same exact service, showed up on time, was trustworthy, and did an impeccable work, then price would start to become more important. Just like gold or any other commodity, people would look to buy at the lowest possible price.

But that is not the case. Handyman services are not a commodity. There are endless ways to differentiate yourself from the competition, and sometimes that’s as simply as showing up on time.

When it comes to hiring home services, price isn’t even close to the only thing customers consider. It’s not even the main thing (at least not for the good customers you actually want to be working for). Sure, price will be a big factor for certain customers, but those are the customers you probably don’t want to deal with anyway. Often, the people who are most concerned with price are also more likely to complain, give you bad reviews online, and cause you headaches.

Don’t design your business around people searching for a deal, design it around the people who are willing to pay for quality and convenience. Not only are they more profitable to work for, they are more enjoyable to work for.

I can’t tell you how many times I get e-mails from my readers telling me that they raised their rates after going through my pricing course ($100K Handyman Pricing) and are busier than they were when they had lower rates!

#3 – Let’s Look at the Numbers

If you take a second to do the math, you’ll be amazed at how even a small increase in your rates leads to a huge increase in profit.

For example, if you currently average about $40 per hour for your services, then by raising your rates to $68 per hour, you would DOUBLE your profit. $28/hr more, and your profit doubles.

Or, let’s say you raise your rates by just $5 per hour. That’s a very small, almost unnoticeable amount to customers. It’s unlikely that this amount would impact their decision to hire you. This small increase would likely lead to an additional $8,400 per year in profit for a full time handyman.

What if, instead of dropping your rates, you invested that $8,400 into marketing your services? I can tell you exactly what will happen. You’ll get way more customers and you’ll be able to charge a lot more than you would have otherwise.

In fact, good marketing can be the difference between charging $40 per hour with an empty schedule and charging $100 per hour with a schedule booked out 3 weeks in advance. That may sound extreme, but I’ve seen it countless times over the last seven years of consulting with other pros and running my own business.

So Stop Guessing and Start Profiting

Here’s the deal.

The handyman business, the lawn care business, the plumbing business, and just about every other home service business are all PROVEN business models. Thousands of others have already figured things out the hard way. And, the most successful will always tell you that being the lowest price option is a sure way to struggle and low profits.

So instead, save yourself some time and frustration. Follow a proven system that works, sidestep the common pitfalls, and get straight to making money.

Learn One Simple Strategy That Will Instantly Boost Your Profits

Handyman Pricing Secrets

Get this FREE PDF guide that reveals a simple, proven strategy that can instantly boost your profits by $8,000 to $20,000 per year as a pro handyman.

The best part is that it doesn’t require any work or time to implement. Just a small shift to how you price your services.

  • Eric Gregg November 14, 2017

    Hi dan i love all the emails you send they have helped but. The resourses are out of my price range so it doesnt help at all. When your a new business and have no money how can someone afford to purchase a book that is so much? He cant thank you i would love to read those books and put them jnto play but im one of those guys who cant afford it. I dont mean this in a mean way if it sounded that way. Im just explaining myself. Thank you hope you have a blessed day

    • Dan Perry November 14, 2017

      Hi Eric,

      That’s ok, I totally understand. Have you read through this entire website yet? I have a LOT of free content that, if implemented, will get you to the point where you can easily afford my paid trainings. Hard work always pays off.

      -Dan

      • Matt Vorst November 14, 2017

        Dan –
        I’m three months into my business model and want to thank you for your expertise. A portion of my budgeted startup finances were for training – the money was well spent on your book! Thank you!

        • Dan Perry November 15, 2017

          Great to hear, Matt!

    • Wesley Stoodley November 16, 2017

      Hi Dan,

      Love the websight and the emails. I save them all and read them over and over to pick up new ideas. I aucally found you on itunes podcaset wich you should get back to doing! Hope to start my bussines here soon, here in Minnesota you need a builders license to do any kind of work. Any way keep the emails and blogs coming!

      • Dan Perry November 16, 2017

        Thanks Wesley! I’ve thought about doing more podcasts. I just need more time.

  • Dylan November 15, 2017

    Hey Dan, Dylan writing. Great post, I love the way you challenge some of the business intuitions we have like the idea that offering the lowest price is paramount. It must have something to do with being embedded in a consumer culture and the state of the advertising environment that pushes the fallacy of more for less on every TV, radio and YouTube ad we encounter. I love your genuine delivery of content, and I’m feeling really inspired to one day start my own taping business after discovering your podcast last night. Keep up the great work!

    Cheers.

    • Dan Perry November 15, 2017

      Thanks Dylan. Glad to hear I’ve giving you a little inspiration. I’m always thankful for the people who inspired me to just get started.

  • David November 20, 2017

    Hi Dan
    I’ve really gleaned a lot of information from your podcast. I’ve tried charging more in the $40-$50 range in my Handyman business in the north of New Orleans area. I seem to notice that customers start to back off unless I charge them around $35hr. I have explained that if google the average rate for Handyman it is closer to the $70hr range. It doesn’t seem to make a difference. I’m in an affluent cottage town but they don’t want to pay what everyone else seems to be paying. I’m afraid I will lose work if I start charging the fair rates. Any comments would be appreciated.

    • Dan Perry November 20, 2017

      I don’t know much about your business, but whenever I hear this it brings up two questions. Where are you getting your customers and how are you presenting yourself? If all of your leads are from craigslist or from word of mouth, then that is a big part of the problem. Word of mouth can be good, but not if people are recommending you because you’re cheap. And, as you’ve probably gotten from my podcast, looking professional and having confidence in your pricing goes a long, long way.

      • Mike C December 5, 2017

        Well said Dan.
        But just to add something for thought, I get most if not all of my business from Craigslist or word of mouth.

        the thing to keep in mind about Craigslist is one or two people out of ten will be good customers. Weed out the bad ones quickly and hold on to the good ones.

        If you work with one good customer for 4 hours at $50.00/hour That’s equal to 8 hours at $25. 4hr @ $60.00 equals 8 at $30.00.

        Work less and make more whenever possible. The customers you are looking for are out there. Go find them. Stick to your pricing.

        It’s better to be the nice reliable person that is labeled as “not cheap but he/she is worth it,” than the person that is “super busy, does an okay job and the price is right.”

        • Dan Perry December 7, 2017

          Yes, and one hour at $200 is even better. The longer I’m involved in this business, the more money per hour I see is possible (without ripping people off) if you structure your business properly.

  • Paul Wright April 5, 2018

    $25 Per hour = Hammer and Hand Saw
    $75 Per hour = Pneumatic tools and Power saws
    The job costs the same. But looks better with the right tools.

  • christian October 2, 2018

    Great article! I’m 23 and I work with my Father who’s been a general contractor for over 20 years. Now I too would like to start my own business, and a handyman seems like a great way to go. So I’ve been doing a bit of research on the matter and have found myself on this website many times. Thanks for the help!

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