{"id":13983,"date":"2024-03-09T10:57:15","date_gmt":"2024-03-08T22:57:15","guid":{"rendered":"https:\/\/stage.buildxact.com\/nz\/?p=13983"},"modified":"2024-05-03T14:23:00","modified_gmt":"2024-05-03T02:23:00","slug":"pricing-mistakes-2024","status":"publish","type":"post","link":"https:\/\/stage.buildxact.com\/nz\/blog\/pricing-mistakes-2024\/","title":{"rendered":"Five biggest pricing mistakes to avoid"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tHow much do you invest in understanding and creating pricing models for your business? The reality is many business owners in the home building and construction industry are \u2018winging it \u2018when it comes to pricing, and in the process, compromise the ability of the business to generate consistently high profit margins<\/b><\/a>.\n\nTo tackle this issue, let\u2019s discuss the biggest mistakes that we regularly see with business owners when it comes to pricing work.\n

Aiming to be \u2018average\u2019<\/h2>\nA pricing trap for newcomers is often gathering information around what other construction businesses charge, and then price based on the average of that data.\n\nI trust you are not an average business, and you are a professional of your trade. Therefore, price accordingly.\n\nThe other mistake made is pricing below average so that you win work. This is a pitfall as it may become your default way of operating and it becomes challenging to change.\n\nWe believe at PROTRADE United that pricing in the top 10% to 20% of your sector is the goal to set.\n

Underestimating costs<\/h2>\nOne of the biggest errors you can make is underestimating the true project<\/b><\/a> costs. Whether it’s cost of materials, labor or unforeseen complications, failing to account for these expenses leads to financial disaster.\n\nDodge this bullet and conduct a comprehensive cost analysis before quoting a price. Consider the time required for the job, the cost of materials, additional costs related to labor, and any potential complications that may arise. It\u2019s better to slightly overestimate than to face financial strain mid-project.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Failing to factor in overhead<\/h2>

Many business owners often overlook the importance of factoring in overhead costs when pricing. Overhead includes expenses <\/b><\/a>such as insurance, motor vehicles, licensing fees, software, tools and equipment maintenance and administrative costs. Be meticulous in accounting for all overhead costs to establish a pricing structure that covers both direct project expenses and ongoing operational costs.<\/p>

Charging for time vs. outcome\/results<\/h2>

Your customers pay for results and a solution to their problems. When you get drawn continuously with charging, just for your time, it can de-value the results that you\u2019re delivering.<\/p>

Think of going to the dentist. The price to eradicate a toothache is the same regardless of whether it takes 60 minutes or 10 minutes to fix. Which timeframe would you prefer?<\/p>

Apply this to your own business, as your customers want quality delivered in the shortest period of time. Be a specialist versus being a generalist and look at the problem you are solving for your customer and what it would cost them for that problem to continue.<\/p>

Not investing enough time and thought on your pricing<\/h2>

The most profitable businesses regularly spend time evaluating pricing structures<\/b><\/a> and how to package product\/solutions in a way that delivers great value for the customer, as well as generating consistently high profit margins for the business.<\/p>

If you want to master your money and become financially successful, then allocate regular time to this aspect of your business. Remember, what you nurture, is what grows and develops. What you neglect, withers and dies.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Consistency is key<\/h2>

When you determine a fair and value-based pricing strategy that not only covers your costs but also allows for a healthy profit margin, you have the profit to reinvest in your business while also providing quality service to your clients.<\/p>

In the end, it\u2019s up to you, what action you take, depending on how committed you are. Avoiding these mistakes above may seem simple; however, consistently applying key steps to win profitable work is not easy.
Reach out to the team at PROTRADE United for any support you require in developing a pricing strategy that works for you.<\/p>

And if you are ready to get started with your own pricing model, the best way to test your knowledge is by working with construction management software that includes pricing catalogs from area material suppliers.
If you want to learn more about software, visit Buildxact and ask for a free trial<\/b><\/a> or software demonstration<\/b><\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Jon Mailer is CEO of PROTRADE United, Australia's leading provider of business services to the trades industry. PROTRADE United works with businesses around the country to help with Strategy, Cash Flow, Marketing and People Management.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Many builders and contractors “wing it” when pricing. Don’t compromise your profits. Avoid these mistakes.<\/p>\n

Costings<\/span><\/a> Estimating<\/span><\/a><\/div>\n","protected":false},"author":11,"featured_media":13984,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25],"tags":[104,103],"contributing_author":[],"class_list":["post-13983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-costings","tag-estimating"],"acf":[],"yoast_head":"\nFive biggest pricing mistakes to avoid | Buildxact NZ<\/title>\n<meta name=\"description\" content=\"Learn to avoid these five pricing and estimating mistakes that consistently cost home builders and contractors profits.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Five biggest 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