How to hold your price when you're the smaller operator

The smaller business loses the job on price, the owner wonders why, and the answer is always the same: somebody undercut us. So the fix that gets applied is a discount, and the discount becomes the new starting price, and in twelve months the same conversation happens at a lower margin. Nobody decided that. It just happened, one job at a time.

You do not have to win on price. You do have to be able to explain your price, and know exactly where you stop.

Know your floor before you quote

For each job type you sell, write down what it actually costs you — materials, the hours, the supervision, the warranty risk, the cost of the enquiry itself. Then write down the lowest number you will do it for and still be glad you took the job. That is your floor. Owners who have never written it down end up accepting jobs that were loss-making the day they were signed, and find out at year end.

The floor is also what makes quoting calm. If you know where you stop, you stop negotiating against yourself in the middle of a phone call.

Quote in options, not discounts

One price and a discount when pushed is an invitation to haggle. Three options move the conversation from cost to scope:

• What they asked for. Priced properly, no padding.
• What you would actually recommend, and the reason in one line.
• The version that solves the problem they will have in three years.

Most customers pick the middle one, which is the one you wanted them to have anyway. And when they say it is expensive, you now have something to take away instead of something to give away.

A discount without taking something back is not a price decision. It is a gift, and it teaches your customer that your first number was fiction.

When you lose on price

Ask. One question, on the phone, in the first twenty-four hours: what did we lose on, and what was the number. Owners hate making the call and almost always wish they had. The answer is useful in a way nothing else is, because it tells you whether you were beaten on price, on scope, on lead time, or on nothing at all.

Log it. If the same competitor wins three jobs in a row on price, that is not a pricing problem — it is a gap in what you are selling, or a market you should stop chasing. Both are decisions you can make, and neither is visible until you write the number down.

What not to do

• Don't let anyone quote below the floor without approval, including the owner on a Friday afternoon.
• Don't discount to win without taking something back — a smaller scope, a faster decision, a deposit, a referral, a testimonial.
• Don't hold a price you can't explain in two sentences. If you can't say why it costs what it costs, the customer will assume you don't know.
• Don't chase the cheapest buyer in your market. It is the least loyal segment, it is the first to leave, and it is the one that will grind your margin down to nothing.

Being smaller is an advantage in most of these trades. You decide faster, you can name the person doing the work, and the customer can ring you and get you. Price like you know that, and the businesses that only compete on the number will keep losing to you on something else.