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April 2, 2022
11discounting in your trade business

Customer Discounting for a trade business leads to profit leaks

Customer Discounting in your trade business is a quick race to the Bottom

Some tradies will start customer discounting to land enough renovation or trade jobs to just survive in the current building market downward trend or to keep their sales pipeline busy. So right they have work, they will survive?

WRONG – don’t do customer discounting!

Right about the “just survive” bit because survival is all you derive when you discount.

Discounting really is a race to the Bottom. The bottom line and an empty bank account is what hits you with this stragey!

Geoff Gartly has been looking after small business trade clients for many years. He has seen what works and what doesn’t. We know that discounting is NOT a recommended business strategy.

Profit can be tight sometimes when you are quoting but don’t discount to get the job!

We got your back – our tips on how not to dig a hole with customer discounting!

So here are a few tips to help you quit discounting in your trade business.

Decide that you can’t afford to discount

Unless you have heaps of spare $$$ in the bank you can draw on to tide you over several years make the decision that you cannot afford to customer discount anymore.
It’s a bad habit to get into at the best of times. But, if you do it for too long, it can become a hard habit to break. Sure, you may need to adjust your prices to meet market conditions, but that is quite different from getting into a discount war against another builder or tradie. Do that, and you both lose?

We help our tradies get the pricing right so that the hourly rate allows for GP, admin , mistakes and anything else that can impact.

Re-evaluate your service.

Make a (long) list of all the things you provide for your customers and make customer discounting not one of them. List things that are not in a typical estimate. If you are a good builder or tradie, you actually provide your client with many things that they don’t pay for. So, increase the value of your estimate by letting them know all the other things you provide. Improve your sales delivery and your customers will feel like they are getting a fair price!

Determine to walk through the fear (of missing the sale).

This is the hard part because it’s so personal. Yet it is an absolute requirement if you are going to rise above the discount mentality because facing fear head-on is the only way to overcome it. Sometimes you just need to talk to someone who has done it before to know it is OK

It takes courage to stick to your prices, but if it ensures you retain decent margins and make decent money, then it’s worth learning to do. Right?

To do it right, you need to add value to your trade business by marketing quality and service, not cheapness and discounting. Set your trade companies vision and start marketing this to your customers

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