Don’t be afraid to charge what you’re worth – Brainiact

Don’t be afraid to charge what you’re worth

Welcome back to Leader Talk! On this episode we had the pleasure of chatting to Marcel Donnelly, CEO of FlatRateNOW, an Australian-made quoting solution for Trade Service Businesses.  

Marcel believes cooperation and teamwork are core growth mechanisms for an innovative business. To him, the key to a successful business lies in fulfilling customers’ needs, which is the main idea of FlatRateNOW; to help tradies in accelerating and automating quote creation, calculation, and manipulation.

In this chat we spoke about how business owners should know their worth in both time and money, and about the value that being confident in their worth has when working with clients. 

Want to learn more? You can read or listen to our chat with Marcel on YouTubeSpotifyListen Notes, or Player FM. It’s also available anywhere you listen to your favourite podcasts via Buzzsprout.

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Authored by Marcel Donnelly, CEO of FlatRateNOW.

It amazes me how many business owners and employees I come across who don’t know their worth nor want to figure it out. People are often content with just seeing how much others charge and estimating their services based on that. They’re always scared to go over their competitor's prices in fear that they’ll lose that sale even though in reality, they’re services are worth much more than that.

Working for a software company built by, and for, tradespeople, I’ve learnt a key lesson that’s applicable to any business. Your customers are looking for high standard services over anything else. You should never be willing to sacrifice customer satisfaction for more profit or anything else.

You’d be surprised at how little your customer minds if you charge more than someone else – as long as they are getting great customer service on all fronts. I’m here to tell you that dealing with customers, no matter what industry you’re in, is about clear communication, which includes explaining why you’re charging what you’re charging and having the confidence to follow through with it.

Get to know your worth

Regardless of what field you’re in, I’m sure you always have this concept of “time spent versus money earned” in the back of your head. The first step in running a business is speaking to your accountant to understand and appreciate how much money your hour is worth. 

One reason FlatRateNow was created, was because so many tradesmen don’t understand how making quotes for clients is time spent for money not being earned. They spend hours calculating quotes for their customers. Once you figure out what your hour is worth, say $200, then you start to realise that for every hour you’re spending writing these quotes, you’re effectively losing $200. How much are you charging for the hour? How much do you need to be charging according to the cost of your business and all the overheads? 

Once you understand your worth, then you can change your habits and processes. You can start to think about ways to build faster quotes so you can get more jobs, and then get more employees so that you can get multiple quotes per hour and the cycle goes on.

With that being said, knowing your worth (even if it ends up being more than others) will also help reduce risks. Everyone knows you get what you pay for. Charging less than competitors may seem like you can win over more customers, but this can actually backfire. Not only do you decrease your profit margin, and sometimes even lose money, but you also risk damaging your reputation as people think your low prices reflect a low quality of work.

From simply knowing exactly how much you’re worth in time and money, you will see how much more efficient and profitable your business can become.

Sometimes, less is more

Every day, I hear tradesmen saying, “I have so many jobs to quote! So many jobs to do!” They might be complaining about it or they may actually be subtly bragging about it. Either way, a large volume of jobs is not always indicative of efficient business processes.

A lot of businesses aim high and are proud to quote seven to ten jobs a day, but realistically, is it possible to get through all of them? Customers will surely be left waiting and questioning when their job is going to get done. The thing with these businesses quoting more jobs a day is they’re only able to do so by quoting at a lower margin, which inevitably means lower quality work. Then, there’s the risk that if something goes wrong, there’s not enough money in it for them to go back and fix it. In short, their customers will not be happy and their reputation for the standard of work is lowered. 

With tradesmen who use FlatRateNOW, they are more efficient in the quoting process, but this doesn’t necessarily mean they get more jobs – and we don’t want them to. With our customers, we only aim for them to quote four or five a day and win three. Yes, they get fewer jobs, but this is because they’re doing those jobs with the profit margin that they’re after. They’re happier, less stressed to get through the jobs quickly, and so, provide greater customer service. This means they often have greater customer satisfaction. 

Stick to the pricing you need 

What comes after understanding your value of service is being confident in it. I think everyone, including myself, will always have that little devil called self-doubt on their shoulder, whispering in their ear and telling them they’re not worth what they’re asking for. There are two aspects of handling this: backing yourself up technically and backing yourself up mentally.

First, technically. You know through research and data that this price is what you need, to provide quality services for your customer and to do it the right way. Now, your customer needs to know it too. Customers are willing to pay more if they understand why they should. This is where tradies often overlook the importance of proper communication with their clients. 

Often when tradies are doing a job, they’re not clearly articulating what’s going on, yet still expect the customer to just accept the quote they give them. They let the invoice do the talking when they really should be sitting down with the client and explaining the problem and the solution. This way, rather than trying to sell something, you’re educating. Your customer will see the value in the service and the value in what you’re asking for. They won’t feel like they’re being sold to because you’re not making a sale, you’re genuinely trying to help. In other words, with good customer satisfaction, profit will naturally follow.

Then of course, there’s the mental aspect to confidence. Learn about yourself and what helps you handle the anxiety and self-doubt that comes with pricing your services. I know I personally benefit greatly from breathing exercises or affirmations. Use your existing customers and focus on their positive feedback to pad out the negative in your mind. Tell yourself you have these clients backing you up, so you must be doing something right for the industry.

One surprising thing everyone, regardless of the field, can learn from tradesmen is their confidence. Tradies have to increase their rates all the time – but they’re confident about it! They know the prices of materials will always fluctuate. They know there’s a reason for the increase and it has to be done. They also know their services are worth it and their client base will understand it too. 

Good service over anything else

Most of the time, tradesmen walk away from their customers to calculate a quote or deliberate it overnight. However, according to a PwC study, customers are willing to pay more for a good customer experience, which includes speed, convenience, consistency and friendliness. 

That’s what is so great about quoting solutions like FlatRateNOW, for example. The software works out consistent pricing based on things like the average cost of the specific installation and the materials that will be used, while also leaving space for ad hoc changes like labour rate per hour or product mark-ups. From this, it has clear descriptions of the job so that your customer understands what they’re paying and, more importantly, why they’re paying it. It provides speedy quotes then and there for your customer’s convenience, which leads to friendlier interactions.

With that, you don’t have to be afraid of having higher costs than competitors because you know the reasons for them and the standard they guarantee and now, so does your customer. It gives you that confidence so that you are no longer afraid to charge what you’re worth. 

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Knowing how much you should be charging may be just one factor of business, but it helps you achieve all of the factors of good customer service that people want to pay more for. 

Don’t get hung up on whether you’re “asking for too much” when you already know it’s what you need to operate. Knowing your worth and leveraging that at every job is important for your growth. Customers who value your standard of work won’t mind paying your prices because it’s justified and guarantees customer satisfaction, even if it is above what the other guy is offering. Never give up customer satisfaction for the sake of cheaper quotes!

 

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