While we have lived in a low inflation economy for some time, we are now realising that it is having a real impact, and as a consumer or business, it will depend on what you buy. Fuel and food may be falling in price, but business rates and rent are certainly keeping pace with, or even exceeding inflation. Add to that the chancellor’s summer budget announcement of a move to the National Living Wage (NLM) so that by 2020 those over 25 will be paid £9 per hour, flooring businesses are going to face some very stark choices – either raise prices or cut costs and jobs. I reckon some of us must start thinking of our options because, according to the chap who served me at my local wholesale supplier yesterday, our material costs will definitely be rising. He informed me that most floor finish manufacturers had put their prices up in January and that his company would be charging more from the end of February. Cutting jobs is extremely difficult but even harder is the prospect of raising prices. We often issue a quote well before the date we carry out the work and also before knowing what the price increase will be, and cannot take this unknown quantity into consideration. Also, the web has increased transparency for consumers, and you can’t get away with just a short intake of breath between your teeth during a survey visit like in the good old days (although I hear some workmen such as plumbers may still be using this tactic!). The customer just has to check out the price of a product on line – easy! Can prices be kicked upwards? The answer, predictably, is maybe. As any Flooring company proprietor knows, when they increase prices, they run the risk of losing customers. While some suggest that getting the pain of price hikes over and done with in one go, a customer is far less likely to notice gentle and gradual price rises. However, I have found that it’s worth noting that the right price doesn’t always have to be the lowest price. The reality is more akin to the right amount of value that the customer feels happy to pay for – and that can be higher than competitors if the offering is right. I personally don’t think it is necessary to have razor-thin margins. In fact I believe that we don’t have to offer low prices at all. My New Year’s Resolution is to have a three-point plan of attack when considering a price rise. Firstly, I think you should add value, because most people are prepared to pay more for better customer service. The second is to offer something for customer loyalty, or a discount of some-kind. And I have decided that the third element for my business - Floorfixer, will be to train my staff on putting more importance on up-selling. The customer will always like getting a better deal because of their loyalty. It goes without saying that there’s no ‘one size fits all’ method of raising prices. What suits you and what suits a competitor will depend on what you are offering, where you are located and the influence of the web. Either way my advice is to tread carefully. Bob www.floorfixer.co.uk
I'm trying to hold my prices and keep losing the jobs. I know I'm not as expensive as some but the only job I've had off one contractor is because no one else could do it. Really pissing me off as I've priced loads recently. It's getting the right customer that doesn't mind paying a bit more as long as they get a decent job done. Some customers just want the cheapest and even feel ripped off when you submit a quote that's more than others on the table. These are customers we can do without.
I won't raise costs as I'm happy earning the money on the jobs I'm quoting on and getting. I don't think costs have ever increased in this game as I still feel some prices carpet fitters get for working there day are rubbish and they should increase there cost for what they do. By the way I do hard flooring mainly.
Merit hit the nail on the head....ive put in several quotes and the customer comes across like im trying to rip them off. I always explain that my quote may not be the cheapest but cheapest is not always better. I have won some though that I thought id have no chance of getting just because of my rep. Im not saying im shit hot at everything but I have built up a real good rep especially now im more of my own jobs rather than the subbying to contractors. I actually fell out with one firm because it turned out I priced quite a big job that they quoted for also and it wasnt until few weeks after I finished the job that I found out they had quoted ....and lost of course but this was purely down to word of mouth. They accused me of stealing their customer and basically said I stole it from them, I told them I had no idea but the way they made me feel I basically told them to F'off and dont call me again. Customer went to a few firms and by chance someone had mentioned me so I got to quote aswell. The firm thought I was being sneaky but I honestly didnt know they had been out to see it, even so it wouldnt have made any difference to me because if we get a phonecall we go and look at the job. Back to the money side of things, I put my day rate back up start of the year with a few of the companies I sub for because when the recession hit them yrs ago we had to trim our day rates just to get work and not one of them moaned about it, I was quite surprised. One of the directors said to me yes you are right, things aint as bad as they were... I used to find myself overly justifying my prices with some customers just to make them understand that we have all got to make a living but now times are better I just leave it with them and crack on because there is plenty of work out there and you shouldnt be made to feel like you are coming across ripping people off. My rates and m2 have just gone up, not hugely but counts when it comes to quantity and just a couple days ago I found out I won another job for a mortgage brokers premises (large house turned offices) that I quoted with my new rates and at the time I was thinking I went in a bit too heavy but turns out the couple that own the place liked my attitude when explaining and advising them on the type of flooring they should go for. The shop that quoted the cheapest came across hard to work with and seemed miserable - the couples own words.
Holding prices can be a struggle, as long as your not over charging your competitors then i think that a little inflation on your prices are okay.
