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As a child, I was told, “‘Ain’t’ ain’t in the dictionary.” I was instructed to use the contraction isn’t (is not) instead. But, with time being what it is and change always around us, and humans colloquially changing the English language — ain’t, right or wrong, has become integrated into the English language.
Another thing I was told as a child is “Cheap ain’t cheap.” Those who told me “ain’t” isn’t in the dictionary were using the word they said ain’t a word to make a point.
Does the fact that cheap ain’t cheap mean expensive is better? Not necessarily. High prices alone do not mean consumers are getting better value. However, it is essential to understand that true excellence costs more to produce than flimsy mediocrity.
That means the prices of PHC service contractors who deliver excellence will be higher than those of mediocre contractors who offer schlock at low-ball prices. It also means that the clientele of excellent contractors receive better value for the dollars they spend with excellent contractors than the low-price buying consumers who deal with mediocre contractors.
As a contractor, you must decide whether you want to be a mediocre contractor or an excellent one.
Mediocre vs. excellent contractors
Excellent PHC service contractors hire techs who have knowledge and grasp of the technical intricacies of plumbing, heating and cooling systems, as well as the mechanical aptitude to adequately address consumer requests. Excellent techs also have integrity, loyalty and the intent to deliver excellence. They are presentable, neat and clean in their appearance and workstyle. They communicate with consumers in a friendly manner and they explain to consumers the circumstances surrounding the consumer’s requests.
They give options and prices so consumers can decide which option they would like to proceed with before authorizing service. Excellent PHC service contractors compensate their techs in a fashion commensurate with their techs’ abilities. The reason excellent contractors are exceptional is that they genuinely deliver excellence.
Mediocre contractors deliver their services by placing price before excellence. Many set their prices on what the other guy is charging. Their test for hiring technicians is handing a wrench to the prospective techs and, if they don’t drop it, they place a mirror under their noses to ensure they are breathing.
This type of hiring scrutiny jeopardizes their ability to deliver excellence as they approach the slippery slope of mediocrity. Those who charge a dollar less than the other guy rush forward to get to the bottom of that slope as quickly as possible.
Mediocre contractors who implement time-and-material pricing show they have no confidence in their ability to properly calculate their selling prices. They deal with price-buying consumers who want their requests addressed at the lowest price.
Since there is a limited amount of time in each day, week or year to bring in revenue to a business, price-buying consumers who want low prices and contractors who play follow the leader by charging a dollar less than the next guy, mediocre contractors are forced to keep their time-and-material rate low since that’s the only comparison price-buying consumers are concerned with.
In a five-day, 40-hour workweek, there is only a maximum of 35 potentially revenue-producing hours per tech. You pay the tech for 40 hours, but the tech loses 1 hour per workday to non-revenue-producing duties, such as checking the trucks’ vital signs (oil, water, tire pressure, etc.), restocking truck inventory and addressing paperwork, regardless of it being done with actual paper or digitally. That leaves only seven potentially revenue-producing hours per tech workday for every eight hours paid. If any of those seven hours are not sold, the cost to the contractor for those hours is lost forever.
Excellent contractors deliver their services first with the delivery of excellence in mind and the intelligence to control their operational costs. They do this without infringing on the superior value they want to deliver to their clientele at prices that will allow them the opportunity to recover, and earn a profit above, their actual costs.
Excellent contractors, who quote upfront prices based on their actual cost and deserved profit margin, maximize their ability to maintain a clientele of consumers who want excellence for the dollars they are spending. Those clients are willing to pay higher prices for the value they receive from the delivery of excellence rather than endure the flimsy mediocrity offered by the low-ballers of the industry.
Correctly calculated upfront contract prices are based on the average time and material an average tech uses to perform a specific task. By using the accurately calculated average times, contract pricing always reflects the contractors’ true cost — even when a task takes a bit longer than the calculated average time. It’s because there will also be times tasks will take less time to perform.
No contractor sells all available tech hours all the time. When a potentially revenue-producing tech hour is gone, it is gone forever, even though the contractor had to pay for all the costs of all available tech hours. Excellent contractors can bring in more money to their businesses than time-and-material contractors.
They quote upfront properly calculated contract prices based on average tech times to perform tasks. They employ excellent techs who can do the job faster and better than average techs, which allows them to make up for the slow times. Those techs can work more jobs and bring in more money so excellent contractors can hire more excellent techs — who deliver excellence to your clientele and profits to your business. Win-win!
Time-and-material contractors only charge for the hours they sell when, and if, they sell them.
Some mediocre contractors are just blinded by the bliss of their ignorant methodology. Others, many of whom are never satisfied with the monetary results they get from their businesses, think the stress and frustration they encounter from their poor business habits is just the nature of the business beast.
Horses are beasts of burden, and like a horse with blinders, mediocre contractors just see the road ahead and not any other path. They plow forward because the blinders diminish their vision. They erroneously follow the path of charge less and work harder. They are blinded from seeing the road that leads to delivering excellence and charging properly profitable selling prices, which allows the opportunity to recover their real cost and earn a profit above that cost. The fictional movie character Forrest Gump stated the truth regarding this flawed type of thinking when he said, “Stupid is as stupid does.”
Mediocre contractors who charge on a time-and-material basis increase stress and frustration by their flawed pricing procedure. This is evidenced every time a consumer complains the tech took too long to perform the task or the consumer found the material on the Internet or at the local big-box store where they were charged less.
Those complaints emanate from the fact that the consumer didn’t know the price before the contractor did the job rather than for the number of hours and material charged.
Excellent contractors, who utilize correctly calculated upfront contract pricing protocols, quote the price before consumers purchase the service. There is no after-the-fact sticker shock associated with time-and-material pricing. There is no itemization of labor and material costs. There is a price to perform a described task regardless of the time and material used.
If the task takes longer than the average estimated time, the price doesn’t change for the consumer. By properly calculating average material costs, there is no reason for the price to alter. It’s the reason it is imperative that contractors correctly calculate their actual costs and apply a proper profit margin to those costs.
When the price doesn’t change and the task is performed excellently, the propensity for a legitimate complaint after the fact is non-existent. When the number of legitimate complaints is mitigated and only illegitimate complaints remain, stress and frustration levels due to complaints are extremely low.
When deciding whether you are going to be an excellent contractor or a mediocre contractor, keep in mind that mediocre contractors don’t have the financial fortitude to deliver excellence. They increase their stress and frustration levels. When average contractors implement time-and-material pricing and they don’t sell an hour, they eat the cost they incur for that hour. They attract price buyers who only want cheap — which, by the way, ain’t cheap for the contractor or the consumer.
Excellent contractors who use contract pricing allow themselves to achieve the reason they went into business — to make a profit above their cost with the least amount of stress and frustration.
If you are not quite sure of how to set up an adequately profitable contract pricing protocol, want to gain your contractor profit advantage, tired of being stressed and frustrated, want to maximize your profits or have questions or opinions regarding this column, give me a call. I’d love to hear from you.
Remember, cheap ain’t cheap and excellence pays higher dividends for the contractor in profit dollars and the consumer in value delivered.