Once you start marketing your contracting business, you’ll probably come across the notion or advice that you should consider discounting your work (or pricing your services on the bottom end of the scale) to attract your first few customers. But, is that necessarily the best way to go?
In some cases it might be. If you are unknown within the market, you’re going to have a hard time charging the same rates as your competitors who have a long track record and lots of people who know them. And, doing discounted work might not hurt you if you have very low business expenses, or have hung on to another full- or part-time job while you make the transition to self-employment.
Beware of discounting your work for too long, though. That’s because, the longer you do great construction work for less than anyone else, the more you’ll notice a few things will start to happen:
Customers will start asking for continued (or even bigger) discounts. It’s no secret that people like getting things on the cheap. If they think you’ll discount your work below what they would have to pay someone else to do the same job, and they don’t have to do anything in return, they’ll certainly keep asking.
Customers won’t respect your work as much as they should. In theory, your construction work should be judged on its own quality. In reality, however, customers will start to wonder (even if it’s just subconsciously) why you aren’t charging as much as other established professionals are, and will treat you as being less competent or experienced.
No one you know will hire you at normal market rates. Once you’ve discounted your work for a customer on a construction project, it’s going to be very difficult to raise prices on them in the future. So, if you want to start earning more money for your hard work, there’s a good chance you’ll be forced to find an entirely new group of clients to do business with.
Over the long run, these issues can literally destroy your contracting business. And so, even though it might make sense to discount your work when you first launch your business, or at the beginning of your career, don’t discount too much… and certainly don’t stick with it as a marketing strategy for too long.
Ready to become a licensed contractor this year? Look here to see our list of upcoming CSLS courses, available online and in classrooms at more than two dozen locations around California.
