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Fluid pricing is when the price for your services fluctuate based on two major factors:
“How much should I charge for…?”
That’s literally the worst possible question to ask. I want to scream through wherever I’m reading it and say:
“TELL US YOUR COSTS, WE DONT KNOW UNTIL YOU TELL US YOUR COSTS!”
If they don’t know the answer to that question, it won’t be long before they’re out of work.
If you can narrow your costs down to Labor & Materials to perform the project, this fluid approach that I’ve built my business on will work wonders for you.
Once you have your Labor & Materials cost for the project you are bidding, the next step is identify what type of margin you want to price the job for.
For example, if your costs are $2000, and you’re wanting to hit a 50% margin, you’d price the job at $4000
Great, so you’re pricing the project at $4000. Now what if this price is too “high” for the customer and you really need to sell the work?
Many people back off after hearing the price is too high, and stop the conversation there. This is a BIG mistake. This is how we combat this objection:
Pricing Tiers
Pricing Tiers are the 3 levels of pricing that you would be OK selling the project for:
So, let me give you an example of how we’re going to use these to close our jobs more efficiently.
The first thing you have to do is look at your project schedule (Supply & Demand), if you have a loaded schedule, you shouldn’t need to lower your price and margins.
Your schedule is full after all, and if you price out enough jobs at your highest margin, you’re bound to sell enough to sustain your job flow.
If you’re in need of work, you should be selling your jobs at a lower margin until you can raise the price back up to the ideal margin (Let’s say 50%)
I learned this in car sales. It was all results driven on a month to month basis. If we were in major need of selling cars in order to save the goal for our month, we’d sell them dirt cheap. (literally, I saw them take over $9000 off the MSRP to sell a car to keep them on track for their monthly goal)
It was all about the monthly & yearly benchmarks set by the dealer, and they used this approach to make sure they hit them. It’s the same for whatever you sell.
So when it comes to negotiation, you may get some apprehension on the highest margin. Your job is to build some more value, and depending on how bad you need the job, you can create a little urgency and drop to the second pricing tier.
“Mrs. Customer, I understand that this was a little more than you were expecting. May I ask, what was your expectation?” - (This question is the most $$$$ question you’ll ever come across when it comes to this process. They will tell you their true expectation 95% of the time)
“To be honest, I was thinking around $3500”
(At this point, you know based off of your Tiers that you have a deal here! You could sell this job for the lowest of the 3 tiers at $3,333!)
But we’re not going to do that…Let’s drop down to Tier 2 ($3,636)
“Hm, well, thanks for sharing that with me. The good news is, we’re not that far away. I’ll tell you what, I’ll lower my price to $3,636 if you allow me to earn your business today”
You can confidently negotiate now because you know your margins ahead of time. She thinks she’s getting a phenomenal deal, you’re pricing your project at 45% which is still a great margin. It’s a win-win. I’ve done this tactic more times then would be possible for me to articulate to you.
The secret is:
Plain and simple, it works! I share a lot of this stuff on my instagram.com/tradethrive ! Thank you for reading! If you want to connect with me about the painting business, join me over at r/paintingbusiness
- Supply & Demand
- Negotiation Leverage
“How much should I charge for…?”
That’s literally the worst possible question to ask. I want to scream through wherever I’m reading it and say:
“TELL US YOUR COSTS, WE DONT KNOW UNTIL YOU TELL US YOUR COSTS!”
If they don’t know the answer to that question, it won’t be long before they’re out of work.
If you can narrow your costs down to Labor & Materials to perform the project, this fluid approach that I’ve built my business on will work wonders for you.
Once you have your Labor & Materials cost for the project you are bidding, the next step is identify what type of margin you want to price the job for.
For example, if your costs are $2000, and you’re wanting to hit a 50% margin, you’d price the job at $4000
Great, so you’re pricing the project at $4000. Now what if this price is too “high” for the customer and you really need to sell the work?
Many people back off after hearing the price is too high, and stop the conversation there. This is a BIG mistake. This is how we combat this objection:
Pricing Tiers
Pricing Tiers are the 3 levels of pricing that you would be OK selling the project for:
- Top line - 50% ($4000)
- Middle line - 45% ($3636)
- Bottom line - 40% ($3,333)
So, let me give you an example of how we’re going to use these to close our jobs more efficiently.
The first thing you have to do is look at your project schedule (Supply & Demand), if you have a loaded schedule, you shouldn’t need to lower your price and margins.
Your schedule is full after all, and if you price out enough jobs at your highest margin, you’re bound to sell enough to sustain your job flow.
If you’re in need of work, you should be selling your jobs at a lower margin until you can raise the price back up to the ideal margin (Let’s say 50%)
I learned this in car sales. It was all results driven on a month to month basis. If we were in major need of selling cars in order to save the goal for our month, we’d sell them dirt cheap. (literally, I saw them take over $9000 off the MSRP to sell a car to keep them on track for their monthly goal)
It was all about the monthly & yearly benchmarks set by the dealer, and they used this approach to make sure they hit them. It’s the same for whatever you sell.
So when it comes to negotiation, you may get some apprehension on the highest margin. Your job is to build some more value, and depending on how bad you need the job, you can create a little urgency and drop to the second pricing tier.
“Mrs. Customer, I understand that this was a little more than you were expecting. May I ask, what was your expectation?” - (This question is the most $$$$ question you’ll ever come across when it comes to this process. They will tell you their true expectation 95% of the time)
“To be honest, I was thinking around $3500”
(At this point, you know based off of your Tiers that you have a deal here! You could sell this job for the lowest of the 3 tiers at $3,333!)
But we’re not going to do that…Let’s drop down to Tier 2 ($3,636)
“Hm, well, thanks for sharing that with me. The good news is, we’re not that far away. I’ll tell you what, I’ll lower my price to $3,636 if you allow me to earn your business today”
You can confidently negotiate now because you know your margins ahead of time. She thinks she’s getting a phenomenal deal, you’re pricing your project at 45% which is still a great margin. It’s a win-win. I’ve done this tactic more times then would be possible for me to articulate to you.
The secret is:
- Knowing your margins
- Identifying your 3 Pricing Tiers
- Seeing what their expectation is
- Closing the gap on that expectation
- Creating urgency
Plain and simple, it works! I share a lot of this stuff on my instagram.com/tradethrive ! Thank you for reading! If you want to connect with me about the painting business, join me over at r/paintingbusiness