A good story about perceived value...

[Stacey K]

A CONVERSATION ABOUT PERCEIVED VALUE:
A customer asked a contractor friend of mine how much it would cost to do this project.
My friend gave him a proposal: $4500
The customer responded: That’s seems really high.
My friend asked: What do you think is a reasonable price for this job?
The customer answered: $2500 maximum
My friend responded: Ok, then I invite you to do it yourself.
The customer answered: I don't know how to.
My friend responded: Alright, then how about for $2500 I'll teach you how to. So besides saving you $2000, you'll learn valuable skills that will benefit you in the future.
The customer answered: Sounds good! Let’s do it!
My friend responded: Great! To get started, you are going to need some tools. You will need a chop saw, table saw, cordless drill, bit set, router, skill saw, jig saw, tool belt, hammer, etc..
The customer answered: But I don't have any of those tools and I can't justify buying all of these for one job.
My friend responded: Ok. Well then for an additional $300 I can rent my tools to you to use for this project.
The customer answered: Okay. That’s fair.
My friend responded: Great! We will start the project on Monday.
The customer answered: I work Monday through Friday. I’m only available on the weekends.
My friend responded: If you want to learn from me then you will need to work when I work. This project will take 3 days so you will need to take 3 days off work.
The customer answered: That means I’m going to have to sacrifice my pay for 3 days or use my vacation time!
My friend responded: That’s true. Remember, when you do a job yourself you need to account for unproductive factors.
The customer answered: What do you mean by that?
My friend responded: Doing a job completely from start to finish includes time spent to plan the project, pick up materials, travel time, gas, set up time, clean up, and waste disposal amongst other things. That’s all in addition to the actual project itself. And speaking of materials, that’s where we will start on Monday so I need you to meet me at the lumberyard at 6:00am.
The customer answered: At 6am?!! My work day doesn’t usually start until 8am!
My friend responded: Well then you’re in luck! My plan is to start on the deck build by 8am. But to do so we have to start at 6am to get materials picked up, loaded and delivered to your job site.
The customer answered: You know, I’m realizing that a lot more goes in to a job than what a customer sees in the finished project. Your proposal of $4500 is very reasonable. I would like you to handle the project.
CONCLUSION:
When you pay for a job, especially a custom job, (whether it’s a physical project or digital project) you pay not only for the material and the work to be completed. You also pay for:

Knowledge

Experience

Custom Skills

Tools

Time to plan

Time to prepare

Professionalism

Work Ethic

Excellence

Discipline

Commitment

Integrity

Taxes

Licenses

Sacrifices

Liabilities

Insurance
If you request a proposal for custom work to be done, please don’t disrespect a service provider by trying to get them to lower their prices.
If their proposal exceeds your budget, there’s nothing wrong with getting other proposals.
Just remember.. you get what you pay for.

SERVICE PROVIDERS: Know your worth and be confident in it.

CONSUMERS: Recognize their worth and be respectful of it.
Sharing this to support all my friends, family and clients who are Entrepreneurs, Business Owners and Tradesman

 

[DPD]

Computer consultant is called in to help with a system bug. He spends about 10 minutes with the client and then the next day hands in his bill for $1000.99. Client says you were here for 10 minutes how could this be? Consultant replies: pencil $0.99, knowing how to fix the problem $1000.

Here's another story. I used to have customers come to my shop to get their signs. On more than one occasion I would be in the process of working on their small vinyl coroplast sign. I never let a good chance be wasted. Customer says: "Oh, so that's how its done. Looks easy". My reply: "OK, now its your turn". I've never had a customer take me up on the offer.

OK enough with the stories. Perceived value is basic sales. Since all of these stories speak to skills and tools lets look at perceived value another way. If you know a customer can do a job that you can do why are you being asked to do it in the first place e.g. vinyl removal? There are two choices: 1) customer thinks you can do it on the cheap or 2) you decide that you can get more for this job because the customer doesn't want to do it themselves. So ask yourself: 1) do you want to be the cheap provider or 2) do you want to make more money than the next guy (the cheap provider).

While the cheap provider is stuck on this job you can go out and find another job. Better to use your time marketing etc.

It's a paradigm shift, especially if you think the lowest price always wins - it doesn't. There are times you should not bid or quote low-ball. Here's why. Some organizations take three bids. Throw out the low and high and work with the guy in the middle who is not the lowest cost provider. I'll work for this organization because there's a chance I can work for them again. Some organizations take the lowest cost provider and throw the others out. If I win then I'll raise my prices next time but I know I probably will never work for this organization again since they will always find a lower cost provider. Then there's the one I like the best. It's the end of the fiscal year and they've got to spend that budget money. Viola, highest cost provider wins.

I had to ask myself a simple question years ago: Which one is me?

 

[kcollinsdesign]

The only reason to sell a sign is to make a profit. If I can't make money, I don't want to do it. I might give away a sign if I feel charitable, but that's about it.

I charge as much as I can. I've been at this long enough I know what the market prices are. 95% of signs sold are merely commodities, and for the most part are going to cost the same to produce no matter where you buy them from. The big differences are production time and scale. If the customer wants it tomorrow, then a small shop with a printer, laminator, inventory, etc., may be able to capitalize on that. If the customer needs 1000 of them, then a factory will beat out a small shop every time. Most commercial work that comes through my door I just order from a factory then charge to install it. Why would I buy a printer, laminator, equip a shop, pay for labor, etc. when I can get direct printed signs for $1.25 sq. ft. and banners for $0.89 sq. ft. from a factory? I can't even buy the raw materials for those prices (if I can get the raw materials at all)! Plenty of wholesalers out there for everything from dimensional carved signs to electric signs. I've done the numbers: unless you are willing to spend $hundreds of thousands on a large shop, equipment, employees, inventory, and and work two shifts (in other words, create a sign factory), a small to medium shop cannot be competitive with a guy sitting at his kitchen table with a laptop and a credit card.

To the guys and gals out there who can make it on their artistic ability and design skills, I am in awe! I managed to do that for the first thirty years of my career, but it's no longer worth my time. I can get acceptable art overnight using Fivver (don't laugh, some of these people are smoking good). I've never been able to get that kind of production out of any designer I've ever hired, and when I don't need them, I don't have to pay them.

Consider this a freebie. No charge for the pencil!

 

[DPD]

The only reason to sell a sign is to make a profit. If I can't make money, I don't want to do it. I might give away a sign if I feel charitable, but that's about it.

I charge as much as I can. I've been at this long enough I know what the market prices are. 95% of signs sold are merely commodities, and for the most part are going to cost the same to produce no matter where you buy them from. The big differences are production time and scale. If the customer wants it tomorrow, then a small shop with a printer, laminator, inventory, etc., may be able to capitalize on that. If the customer needs 1000 of them, then a factory will beat out a small shop every time. Most commercial work that comes through my door I just order from a factory then charge to install it. Why would I buy a printer, laminator, equip a shop, pay for labor, etc. when I can get direct printed signs for $1.25 sq. ft. and banners for $0.89 sq. ft. from a factory? I can't even buy the raw materials for those prices (if I can get the raw materials at all)! Plenty of wholesalers out there for everything from dimensional carved signs to electric signs. I've done the numbers: unless you are willing to spend $hundreds of thousands on a large shop, equipment, employees, inventory, and and work two shifts (in other words, create a sign factory), a small to medium shop cannot be competitive with a guy sitting at his kitchen table with a laptop and a credit card.

To the guys and gals out there who can make it on their artistic ability and design skills, I am in awe! I managed to do that for the first thirty years of my career, but it's no longer worth my time. I can get acceptable art overnight using Fivver (don't laugh, some of these people are smoking good). I've never been able to get that kind of production out of any designer I've ever hired, and when I don't need them, I don't have to pay them.

Consider this a freebie. No charge for the pencil!

Can I get an Amen? I came to the same conclusions over a decade ago.

 

[WYLDGFI]

I love this discussion! dpd.2174 You have your Amen!