Last week on the blog we looked at Red Flags - signs that the project ahead may get stressful.
This week let's consider what could be another early sign that your prospective client may not be a good fit for your business.
If your client right away attempts to turn your service into a commodity by asking what you charge per square foot, or how much you charge per hour, this could be a clear sign that their project won't be a good fit for your business.
1. They are trying to find the lowest common denominator between you and your competition - price. As a micro contractor it is very difficult for you to realize the efficiencies that allow you to compete in the low-margin segment of the market. There will usually be another outfit that is better equipped or more desperate than you to compete for this work.
2. Even if you do win the work, low-paying work usually comes with higher demands. Customers that squeeze you for price will often squeeze you on other aspects of the project as well, whether that will be quality of the work or scheduling and deadlines.
3. Extremely cost sensitive clients are also the least loyal. So while you are working for them at low margin and passing on other higher profit opportunities that would grow your business, they are busy looking for the next guy that will provide what you do for 5% less. That is their mandate. You need high margin and loyal clients to build a solid foundation for your business.
4. Distilling what you do down to a square footage price or an hourly rate excludes the most important and relevant aspects of what you have to offer. A small contractor needs to find clients that appreciate the quality, service and custom solutions that you are best suited to provide.
5. Hourly rates and square footage price are not really that relevant because the don't tell the whole story. It's just a tempting easy-out for busy general contractors to try and find the best deal. But it is mis-guided. The best value always has to include other aspects beyond price. Try to focus on the goal, the objective for the project, and provide solutions that make sense to both their business and yours.
When someone asks you how much you charge per square foot or how much you charge by the hour, they are really trying to turn what you offer into a commodity. Once you are viewed as a commodity, you will face extreme pressure on your price. It may not be the right segment of the market for you to pursue. It is difficult to thrive operating as the lowest common denominator. Specializing in another market segment might be more profitable for a micro contractor.
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