Time To Raise Prices?
Lauren's husband owns a painting business, and they want to know when the best time is to implement a price increase.
QUESTION: Lauren’s husband has a small painting business and she wants to know how to know when you should implement a price increase, as well as what that increase should be. Dave gives her some tips, along with a secret key to doing business.
ANSWER: I grew up in the real estate business, so I use the apartment complex model. If your complex is full, it’s time to raise prices until you have vacancy. You want a healthy level of vacancy, meaning you’re always going to be losing some customers as you go up in prices. If he’s booked through the end of September, then you are way underpriced. Don’t make a big deal about it. Just start turning in your bids. In your case, it isn’t like a tenant where you’re going back time and time again except in rare cases. You don’t want to start doubling your prices and go that heavy. You might start with 10% and see what happens. Raise them another 10% and see what happens.
There’s only so many hours in a day this guy can work, and the only other option is to staff up. Before I start staffing, I’m going to raise prices and cut the number of customers that way. In the construction business, there’s a rule. The rule is that if you show up when you say you’re going to show up, you complete the job when you say you’re going to complete the job, and you do high quality work, there’s almost no ceiling on what you can make.