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Upper Falls in Yosemite

What A Window Installer Taught Me About Pricing My Services

Last spring, I took a camping trip to Yosemite National Park, which was probably the coolest place I’ve ever been.

While hiking to the top of Yosemite Falls, I came across a guy who owned a window installation company in Washington State.  Let’s call him Cliff for the sake of this story.

I always try to learn from other contractors so I took this opportunity to ask Cliff some questions about his business.

I was immediately hooked.  Here was somebody I could learn from.  He had 30 years of window contracting experience with 15 years as the business owner.

I was drawn to Cliff’s confidence as well as his level of experience.  You could tell he had shit figured out.  The fact that he was in Yosemite with his family gave him points in my book.

At the time, I was struggling with pricing my services and always questioning whether I was too cheap or too expensive.  So, as I followed him up the steep mountain trail I asked him how he determined his pricing.  

He as passionate about this topic, so I knew I’d found a gem.  I could hear the hard lessons he’d learned through the way he was speaking, as if he had found the truth about pricing through trial and error.

Here’s what he said (not exact wording)

“I took a look at my business and the service I wanted to provide and I figured out how much I needed to charge in order to offer that level of service.  I wanted to do good work with high profit margins, so I ignored what everyone else was doing.

I don’t care how much others charge and don’t try to compete on price.  I know what I need to charge in order to run my business and provide a good service.  Most window contractors will quote based on peicework.  They’ll quote by the window and try to have the lowest price.  I don’t do this.  Instead, I take a look at the job, figure out how many guys I need for how many days, and simply charge $750 per day per guy.  Then, I add in the cost of the windows and mark them up 35%.

There’s just so much that varies with window installations such as siding, difficulty of access, and size of windows.  If you don’t charge enough, you end up rushing and not doing a good job.  So, I make sure to charge enough to do good work every time and be able hire the right employees.”

I thought that $750 per guy per day was expensive.  Plus, 35% is a big markup on materials.  I figured that he must have had a sweet connection with this window supplier to be able to mark them up that much.  Nope.

He explained that you or I can go to Home Depot or Lowe’s and buy windows for essentially what he pays for them.  But, it didn’t matter to him, in order to run his business how he needed to, he had to mark up materials 35%.

Cliff’s method of pricing fascinated me because he wasn’t competing on price like other window installers.  Instead, he set his pricing up so that it allowed him to provide the level of service his ideal customers were looking for.

Despite charging often 20% or more than his competitors, he was booked out 2 months while watching others go out of business. Charging more also allowed him to pay his employees well, encouraging them to stick around.

It’s clear that Cliff’s pricing strategy works.  It also demonstrates some powerful pricing concepts.

Services Are NOT a Commodity

Just because your competitors are cheap, doesn’t mean you need to be.  It’s almost always better to differentiate yourself instead by offering a better service, faster service, or doing something else that’s unique.

Cliff was booked solid and received many referrals despite being significantly more expensive.  His customers are glad to pay him more because they knew what they were going to get.  Not only where they getting a quality installation, they got peace of mind.

Make It Worth Your Time

Often times, we as handymen will price our services based on what we think our customers will pay and often take on jobs that aren’t worth it for us.  Despite how it feels at the time, this isn’t good for you or the customer.

If you aren’t making enough money to justify the amount of time and effort you are putting into your business, then you’ll probably start providing a bad service, or even give up.  It’s hard to be motivated to help others when your own needs aren’t being met.

Cliff’s story is a great example of the importance of setting the right pricing structure.  And, it’s just a sample of what’s to come in my new pricing guide!

What do you think?

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  • John Pitsenbarger September 10, 2014

    Thanks Dan for the story. It reassures me that this type of pricing can and does work.

    • Dan Perry September 11, 2014

      It’s good to hear that you and others have found value in it. Thanks for reading!

  • Joe September 10, 2014

    I loved this post. That is how it should be

    • Dan Perry September 11, 2014

      Totally agreed, Joe.

  • Andrew peri September 10, 2014

    Great info , thanks for all the good advice . When I stop losing money on my current job and I get ahead I will purchase your program . I really do appreciate communicating with you , it has helped me lots.
    Thank you

    • Dan Perry September 11, 2014

      Your welcome and thanks for reading!

  • Ron Bolinsky September 10, 2014

    Good insight as usual Dan. This is one of the hardest parts of business that I have experienced in my 30 years in construction. It is a process that takes revamping all the time and I do have to revisit this topic on a regular. Thanks Dan for your work.

  • Mike September 11, 2014

    Thanks for posting this. Just got done doing 2 pocket windows. Gave him a verbal quote while standing in Menards. Told him I may have trouble with slider. Even asked him if he wanted to buy windows from a window installer. One went in fine as expected. The other was a pocket slider which I thought I might have trouble getting to fit correctly. Ended up having to rebuild the whole window opening. This took some time since I had not planned on doing it. Customer ended up complaining about everything I had done. Cost, time to install etc. Even said I was rude to their cat that kept getting in the way. Long story short, sent the bill to him and still waiting for payment.

  • patrick fearick September 15, 2014

    I agree. Don’t even worry about what other guys r doing. Charge for what u think ur times worth.

  • James Mason September 24, 2014

    Great insights Dan, thanks for sharing.

    Pricing in my opinion comes down to three key points –

    1. The way you deliver your price, I.e. Is it verbal, scribbled on a pad or is it inserted into a visually impressive template with your logo and key points of service that differentiates you from you competitor?
    2. Confidence in the way it’s delivered, if you don’t back yourself on price the clients will sense it, have confidence in what your worth.
    3 Execution, make sure you deliver on what you have promised, if your price is right you will find you often over deliver which in turn means you can get great references (I list mine on a separate on my website), and those references act as social proof to give you the confidence when selling to the next potential client.

    Best wishes, James.

    • Dan Perry September 24, 2014

      I like your three key points, especially #2. Confidence in what you are worth is paramount. If YOU don’t believe you are worth what you are asking, how are you going to convince your customers? Confidence comes down to convincing yourself more than your customers.

      • James Mason September 25, 2014

        Totally agree Dan, it’s a mindset.

  • James Mason September 24, 2014

    Btw- looking presentable at all inspections goes a long way was well.

  • The Roof Guys October 1, 2014

    This is an essential article. I was reading another blog that said something to the effect of “there is no such thing as a commodity.” In every area of life, we can spend more or less regardless of what we’re purchasing. Many people chose to spend more! That is good news for us contractors!

    People are willing to pay more for good service, contractors who answer the phone, honestly, reliability, friendliness, etc. The list could go on forever. Stop worrying about what the contractor down the street charges. Your clients aren’t always looking for cheapest (and if they are, probably not an ideal client anyways!).

    • Dan Perry October 1, 2014

      Well said…

  • Rob B January 30, 2015

    Thanks for the advice Dan. As someone e just starting there own business thus kind of stuff is key. I know just starting out it might be a good idea to offer lower prices just to get some work and build some clientele. But then again I offer a customer a rock bottom price on a project and it turned out to be a nightmare. The material I was going to order wasn’t availible for two to three weeks(didn’t know that bc lowes website said it was in stock) the customer wasn’t going to wait and wasn’t going to pay the hundreds of dollars for the difference in material. So with that being said I had a decision to make, take the hit even though I had already given him a price so low it was only a few hundred more than lowes was going to charge for just instalation or tell him I’m sorry but I can’t do the job for the same amount of money with more expensive material and give him his deposit back… well I should have done that latter and given him his money back Even though I needed that job And still made almost a thousand dollars off it. His wife was so nice before I started it was crazy. Only two days into the job things started to change. I explained every detail to him and he was fine with it. It wasn’t until I had the job almost done that things weren’t the way they wanted them, and when I say they I mean the wife Bc she was the boss. I hade to redo almost the while job bc she wasn’t happy. I even bought them better hardware then I quoted them for. They still weren’t happy. So for my effort and time and the great job i did I got payed and then after I had received the final payment and had already given them the payed invoice I had received a review online saying that people shouldn’t hire me bc I’m a criminal and a lier and I didn’t finish the job… I was livid and really wanted to go over there at night with a chainsaw and have some fun… I didn’t though and politely replied to her and told her that if the job wasnt done why did she give me the final payment and that I would fix any problems they had with the job. So I did and she just posted two more negative reviews on top of the one that was already there. So lesson learned don’t bid the lowes price unless you want to work for people like that…

  • Daniel June 30, 2015

    Really excellent information. It is so easy to get caught up in what others are doing. We tend to forget that everyone’s needs are different. I recently had a customer say that my quote was almost twice as high as another quote she had gotten. I started to wonder if my prices were too high but then snapped out of it. I would never know it but I thought, “if she got a quote from a Craigslist fly by night handyman for $10 per hour then of course I would be higher!”Ten bucks an hour might be all HE needs but I can’t stay in business with pricing like that or even trying to match that. Client wasn’t for me. Taught me to stand firm on my pricing.
    Thanks for posting this info Dan great stuff.

  • Micah October 13, 2015

    Thank you for this article. It is very timely for me. I am starting my business in January 2016 and this subject is one I’ve been wrestling with in my mind for several weeks. Thanks again for this article and your blog too. Micah

    • Dan Perry October 13, 2015

      You’re welcome, Micah! Glad I could help.