Sales are for vanity. Profits are for sanity!

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Sales are for vanity. Profits are for sanity!

Encourager-In-Chief: June 15th, 2016

Measure the rights results.

One of the most important lessons an entrepreneur needs to remember is that although you can have sales without profits, you can’t have profits without sales. It doesn’t make any sense to be in business unless you’re going to actually turn a profit. It’s important that you set your gross margins high enough that you can afford to stay in business past the end of the year.

If you don’t have experience in this area, I encourage you to get either a business coach or someone who is already working in your field and compare notes. The latter is most easily done with somebody who works in another state, so there’s no concern about competition.

You can also call into another company and give them all the specifications for a job you are quoting for a prospect. This will give you an idea of what your competitors might charge for a similar job. Be aware that many business owners are not very good at pricing their jobs accurately. You may want to use your competitor's quote as a starting point. Make sure that you are not going to lose money on the job.

If you estimate too high, you can always reduce your price to the customer, but more often than not, you’ll probably realize that you didn’t charge enough. That’s okay. It’s the price you pay for learning your business.

In general, most businesses in the United States operate with between a 25 to 35% margin above their costs. You should never be below these margins and, if at all possible, strive to be significantly higher. Personally, I encourage you to strive to be between 40 and 55% in your gross margins—that is, the amount you charge a customer minus the expense of performing the service.

It’s much easier to lower a price than it is to raise one on an existing customer. Remember, salesmanship is all about learning how to sell at significantly higher prices than your competition because your service is so good.

It’s better to lose the customer, than to lose money on the customer.
- Bob Nathan

I encourage you to download my Overcoming Price Objections program.

Overcoming Price Objections

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