If you have read my columns before, you know that I emphasize the importance of knowing your true operational business costs and of developing selling prices based on those costs and your desired profit margin. Some contractors realize that you must recover your true operational business expenses and earn a profit above those expenses in order to be successful. Other contractors put their heads in the sand regarding those two special ingredients of business success while exposing their business butts to being kicked into a business environment of extra stress, frustration and eventual failure.

Often, those proverbial ostriches of the PHC contracting business are fearful of the potential loss of business that can result from setting their prices too high. So, they throw common sense and mathematical fundamentals out the window as they try to sell their services below their true operational costs, in the hope that the volume of business can make up for their self-imposed errors.

They check their competitors’ prices and charge a dollar less. Never do they conclude that their competitors’ prices were the prices of ostrich-minded dolts.

Logic dictates that prices can be too low as well as too high. The fundamentals of mathematics must be combined with the reality of the quality of workmanship, the true operational business costs and the deserved reward above those operational expenses for the quality provided.

You can’t please everyone

I read an article in the New York Post about overpriced pizza. It seems that a study conducted by ACE.com checked out pizza restaurant prices and 250,000 Google reviews from pizza restaurants across 30 large U.S. cities.

One chain of pizza restaurants was to be the most overpriced. It received 71 price complaints per 1,000 customers; that’s 7% of people served. However, that restaurant maintains an average rating of 4 out of 5. 

Many reviewers praised the quality of their ingredients while claiming their prices to be “mega overpriced.”

Another chain received 20 complaints per 1,000 customers; that’s 2%.

Yet another chain received 62 complaints per 1,000 customers; it had the lowest average rating of 3.36 out of 5.

The article went on to discuss other chains, prices per slice and which cities had the highest prices.

My point in bringing this up is the old adage that you can’t please all the people all the time.

However, for your prices to be properly profitable so you can recover your true operational business costs and earn your desired profit above costs, you must deliver excellence to consumers.

Excellence costs more to produce than the mediocrity delivered by the ostriches of our industry. 

Customers — and contractors — choose businesses they feel comfortable with

It’s said that customers are always right. I don’t think anybody is always right. However, when it comes to customers, if you want to keep them, you have to appease them.

The first step is the intent to deliver excellence. The second step is to set your prices so you can recover your costs and earn the reward you deserve so you can remain in business to deliver excellence. The third step is delivering excellence.

Conduct your own surveys within your business as to how consumers feel about the services you deliver.

Have your technicians hand customers a form asking for their opinion about your business.

Give them choices such as outstanding, excellent, good, fair, poor and no opinion. 

Topics would be office helpfulness, office courtesy, timeliness of appointments, technician appearance (neatness and cleanliness), technician attitude (pleasantness and courtesy), technician work style as it pertains to neatness and cleanliness, service performed and professionalism.

In my PHC contracting business, customer responses regarding the aforementioned categories were consistently outstanding or excellent, at around 98%. 

Your form should ask about their thoughts on your prices. Categorize the choices as more than expected, about right, less than expected and no opinion.

Once again, in my PHC contracting business, consumers considered our prices to be about right 98% of the time. The other 2% was divided amongst less than expected, more than expected and no opinion.

Next, ask them if they will use your firm again: yes, no or maybe.

In my PHC contracting business, the word yes was the overwhelming response 99% of the time. 

Finalize the form by adding a section for the customer to provide additional comments.

We, too, received the misanthropic responses from those consumers who would never be satisfied. However, those types of people were so minimal that they weren’t worth the energy to be concerned about.

When I was in the contracting business, I certainly wasn’t the least expensive. However, I was always the cheapest because the excellence we delivered and stood behind lasted, so that the consumer didn’t have to worry about addressing and paying for the same situation in the near future.

Going back to the customer always being right: Customers choose businesses they feel comfortable with. Contractors should do the same thing. If a consumer doesn’t want you to recover your true and legitimate business expenses and allow you to earn the reward you deserve for fulfilling their request in an excellent manner, you don’t need that consumer.

If you deliver excellence, consumers will be looking for you.

Remember, as with the pizza business, the success of the PHC contracting business is in the dough.