Tradies! Wondering how you can increase your rates whilst retaining your best customers? Read on to hear how we’re partnering up with Telstra Trades Assist to help you become the tradie of choice.
Increase your rates AND customer satisfaction
When was the last time you reviewed your rates? One of the top tips we share with our clients at the start of a new financial year is to look at their rates and determine if it’s time for an increase. Often, tradies are so caught up in the day-to-day tasks of keeping their business going that they forget to assess what they’re charging. Years go by and they still offer the same hourly rate that they charged five or even 10 years ago. With the costs of running a trades business continually increasing, this is an important task to do to ensure your business remains profitable.
In times when the market is tough, or there’s strong competition, it may be tempting to drop your price. Whilst reducing your price may bring in a few price-conscious customers, those customers are likely to go elsewhere as soon as they find a cheaper price. Your efforts are best placed in developing a long-term strategy for growth which focuses on knowing your worth, understanding your ideal customer and how best to communicate with them.
Know your worth
Accurate pricing for profit, whether hourly rate or fixed price, is required to guarantee successful growth. According to Matthew Jones, author of Power Up your Tradie Business, many trades business owners underestimate the hourly rate they need to charge to run a profitable, sustainable business and are focussed on pricing just to win work, without understanding the true cost of running a business. Matthew suggests a good place to start is to calculate your break-even hourly rate by measuring:
- Annual billable time – actual chargeable hours
- Lost productive time, including annual leave, tool box talks, training, potential earnings lost to bad weather
- Annual financial investment
- Employee investment – wages, superannuation, workers’ comp, long service leave etc
- Office admin overhead – phone, internet, insurance etc
- Cost of tools and vehicles
With your break even rate calculated from the above, you need to add the required profit per hour to make it a worthwhile return on investment given your time, your energy and the risk of running your own business.
Know your customer
Matthew suggests it’s essential to understand your ideal customer, then focus your efforts on attracting them. For example, if you are targeting busy professional couples living in the inner city, clear and consistent communication is important for this time poor client. Price is not as important as being professional and on time. Once you understand what is important to your ideal client, you must educate them that you are the expert in solving their problem.
Sell your “why”
What is your purpose or belief that inspires you to do what you do? Whatever it may be, it’s crucial to communicate these with your customers. Simon Sinek describes how customers don’t buy what you do
, they buy why you do it
, in his book Start With Why
. Rather than focusing on what you do, differentiate yourselves from competitors by communicating your core purpose in why
you do it. Matthew Jones adds that tradies wanting to remove price from the conversation must unlock the hidden value relating to the quality of your workmanship, materials, equipment, job management, warranties or after sales service. This will help build a strong connection with your customers by triggering emotions, increase loyalty, and help justify any price increase.
Cloud-based tools for tradies
There are apps available to assist tradies just like you build your profit and long-term sustainability through establishing trust, rapport and value creation for your customers. One which we particularly love here at Carbon is the Telstra Trades Assist app. Telstra Trades Assist
helps you understand and control profit per job, as well as assisting in building loyalty through asset maintenance and to put repeat business and customer happiness on autopilot.
Learn more about Carbon’s partnership with Telstra Trades Assist to see how you can take your business to the next level or fill out the form below and we’ll be in touch to chat.
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