OT; Should I or shouldn't I?

[The Medway Handyman]

I've kept to my price structure the same for the past five years and I'm thinking I should maybe increase my prices?

I regularly get customers saying 'is that all' when given the bill and I have plenty of work coming in.

But like most small business's I worry that if I increase prices I will lose work.

Current prices;

£45 first hour, then £20 per hour. Or Half day (> 4 hours) £100 Or Full day (> 8 hours) £160

Thinking of changing the £45 first hour to £40, but increasing the hourly rate to £25.

Half day would then be £110, Full day £180.

Any thoughts?

P.S. Unbeliever or whatever you are called this week - don't bother.

[Tabby]

The only ways to tell if they will pay more are to compare to others, and to try and see. (There's not a rats chance I'd pay your rates, but I'm not your customers.)

NT

[John Stumbles]

Doesn't sound excessive. Bloody reasonable in fact.

[Nightjar]

TBH I wouldn't pay your present rates. Having said that, if you haven't changed your prices in the past five years the real value of your income has dropped by nearly 15%, so you ought to be thinking very seriously about an increase.

Nobody can really advise you whether your customers will bear the increase. That is something you have to decide for yourself. The only guide you might have is how you compare with the competition, but even then there is no guarantee that they are not undercharging for their work.

One thing you might like to try is introducing a fairly large increase, to recover the 15%, then giving a discount to existing customers, which effectively results in them paying a much smaller increase. That will allow you to judge whether you can attract new business at the higher rate, without alienating your existing customers. If you do the discount in the form of a voucher for a percentage off their next order (don't foget to put a cut-off date for the offer, even if it is a long time ahead), it will also be an excellent excuse for a mail shot to previous customers. Marketing people will always tell you that it is much easier to get old customers back than to attract new ones.

Colin Bignell

[brass monkey]

The only ways to tell if they will pay more are to compare to others, and to try and see. (There's not a rats chance I'd pay your rates, but I'm not your customers.)

IAWTP, at those prices I'd seriously consider doing it myself (even though I can't usually be arsed). Then again, I live in the midlands.

[Donwill]

Are you are actually losing capital? No.

You are keeping your head above water& able to pay your bills? Yes

Your customers are happy as it seems you have plenty of work so money is coming in? Yes

If the above statements are true, I wouldn't change anything even if you have a slight reduction in your standard of living because everybody is, or will experience that, and it's something we have to get used to.

I would argue that Power and Capital has moved from West to East.

Many small companies would be very pleased to be in your position. Don't loose your customers they may not come back.

Good Luck Don

[Skipweasel]

Yeah, but that's 'cos you're not someone who'd GALMI.

The rates sound reasonable to me - they're comparable with what I've been paid to do similar stuff. Don't forget that many people simply haven't a clue. While they might be very competent chicken-sexers or company migration experts they marvel at someone who can weild a screwdriver without poking holes in the scenery. They've made their choices about what skills to learn and we've made ours. No need to feel shy about taking their money, any more than they feel ashamed to take the money from some firm for redesigning the logo and letterheads.

[Matty F]

I can see where I am going wrong. I don't charge anything, and I am snowed under with work!

[tony sayer]

Well thats not the affluent Sarff east is it;!..

[hognoxious]

If you're having to turn down lots of work you're undercharging. On the other hand, if nobody calls back after you give them an estimate then you're probably asking too much.

You'll probably have to do it on a job by job basis. If you're snowed under in one particular week, ask for more; it doesn't matter that much if they refuse.

[tony sayer]

Yes it does. Some who are waged might think thats high if they live most anywhere other than the South East but most people haven't that much idea how much it costs their employer to employ them!...

[Nightjar]

That is exactly what I did to get my latest garden shed built. Bricklaying is not my thing and I didn't need a round tuit either. I got an excellent job at a lot lower rate.

House building seems to be taking off again, but last year there were lots of builders around on the South Coast who would take any job at little more than cost, just to keep going. Like TMH, they seem to be worried about putting their prices up again just yet.

Colin BIgnell

[Nightjar]

His rates are on his web site, which means that they are (now) covered by Advertising Standards. That is why I suggested a higher base rate with discounts.

Colin Bignell

[Nightjar]

On 31/03/2011 07:43, Donwill wrote: ...

I know exactly what my minimum pension will be for more than the next decade (the State pension is a variable amount on top) and I have no expectations of a drop in my fairly comfortable standard of living.

...

The ones I know that survived last year seem to be recovering quite nicely now. A good example is one that rents factory units from my pension scheme. It has expanded from two units into four and has just bought a fleet of new vans.

Colin Bignell

[root]

In this part of the affulent sarff most trades don't seem willing to get out of bed for less than £250. A goodly proportion don't even turn up: "got an emergency job" [side note: is that code for someone who'll pay _any_ price, or someone who's threatening to sue because of previous shoddy work that failed?] and as for getting people coming to quote for work - maybe half of them don't show. Even the ones who do carry out work, the quality can be pretty hit and miss.

What I'd suggest is keeping the base prices, but expanding or diversifying the "product". So maybe offer an "after 6 p.m." service for people who work during the day, at a higher rate. Or some fixed-priced jobs (I know they can be a gamble as you never know what you'll uncover) at published rates. Or maybe even raise the price you pass on for parts and consumables.

Then see whether there's a demand for the higher priced jobs. The key to raising prices seems to be to have a valid reason why they are as high as they are, if someone challenges you. Just saying "increased costs, guv" is not sufficient.

[chris]

I agree with Colin's suggestion I also add that if you have a system of invoices where they have a week or 28 days to pay that you offer a generous prompt settlement discount. I would make the first hour much higher - plumbers charge a fortune - at least =A350 - as that covers if you are lucky the set up charges and then if you give credit make it =A325 per hour with a =A35 discount for settlement at the end of the job - or =A32.50 discount for settlement in your hands before 7 days and if your terms are 28 days - that is the full price If as is possible you insist on payment there and then before you leave the house then none of this applies I would up the prices and say there are unspecified discounts for existing regular clients and tell them in person that you will keep the prices the same for them if they pay you as you leave otherwise its the published rates Your rates by the way are perfectly reasonable - above average but then so are you Chris

[Roger Mills]

If your income has remained static for 5 years, it's not unreasonable to wish to increase it in order to restore your original standard of living.

But I don't quite understand the rationale behind your proposed changes. In particular, it seems a bit odd to be *reducing* the price for the first hour. With this arrangement, you would receive *less* for a one hour job, the same for a two hour job and a bit more for anything over 2 hours.

What is the distribution of your job durations? Do you mainly do longer jobs (a day or more) or shorter jobs (less than 2 hours)? I suppose it's possible that having a lower minimum charge may enable you to get your foot in a few more doors and - once there - get awarded longer, more profitable, jobs. Is that what you had in mind? If not, I think you should be *increasing* not decreasing your initial charge. After all, most tradespeople seem to have a fairly hefty 'callout' charge.

[Dave Plowman (News)]

If you do increase your charges, do so by a reasonable amount. Don't try and go for what you think the market may stand in one hit, as this can annoy existing customers - even although you feel you've been undercharging for a while. I'm ok if a charge increases by roughly inflation - but not when it well exceeds it.

[Tim Streater]

galmi?

There's also folk like me who have a something of a clue, but not the skill, patience, knowledge, or necessarily the tools. SWMBO quite handily fixed the bathroom taps after the plumber explained about the innards, and between us we made 12 raised beds, installed and levelled them. We also erected our new greenhouse, but were defeated by the need to drill holes in the concrete base to anchor it down. My consumer-grade B&D drill wasn't up to the task, even on the hammer setting, but the builder's drill went through no problem.

So we're OK up to a point but beyond that are happy to pay for someone to take it over from there.

Well said.

On the specifics of Dave's query, I'd say that:

makes good sense.

[djc]

Your cheap, I expect to pay £250 per day. Yes I am in Central London but I expect many of your customers commute there and are paid accordingly. A few months ago I needed a rat catcher (aka PestControl), that was £160+VAT for three visits; he wasn't on the premises for more thann 15minutes. On the other hand he was based in Barnet and the next job was Clapham: so he was spending more time travelling than anything else. He said that previously he would have turned down jobs South of the river, or out to Cambridge but 'there was not the work around now'.[1]

Cutting the rate for the first hour seems wrong, unless you find that is an effective loss leader: bringing in small jobs that lead to more profitable business later. I think £200 for a full day, 120 half day. I'd make the first hour £50, the £25 per hour. You could offer discounts for existing customers, which would make the £50 minimum attractive.

[1] times is hard, even the rats is starving.