Pricing I: Knowing Your Worth

Those who know me online and in classes know that I’ll never give a flat out number. My usual response is, “Charge as much as you can”.
Am I just being a jerk? Am I trying to avoid the real answer? Am I afraid to divulge company secrets? Well, yes and no. (My mom always told me I wasn’t a jerk).
The real reason that I can’t give a simple price over the phone, on the Internet or in a classroom is this: I don’t know your costs. I don’t know what you’re worth to your customer. And I don’t know what kind of equipment you’re running, and who’s operating it.
Add to this the fact that, even though you may tell me the name of the stone in question, I don’t know if it’s really that, or if your customer guessed at the name, or – even if the name is correct – what part of the quarry it came from. I must say that it’s flattering to have people put that kind of trust in you to be able to answer these types of questions blindly.
You need to understand, in any job, the costs: both your own, and the costs of your customer.
Let me illustrate this: If you were to buy a fresh Atlantic lobster dinner in Iowa, you would expect to pay more in Des Moines than what you would pay for the same dinner in Maine. Why? Because you realize that, to get that live, double-clawed crustacean from the East Coast to the Corn Coast, the restaurant had to pay a premium. (I love it when they say they “flew them in” especially for your meal. I’ve seen some so big that they could fly in coach.)
Now let’s analyze this illustration. If people couldn’t afford lobster, they wouldn’t eat at that restaurant, would they? So, why would someone install marble or other natural stones if they couldn’t afford to care for it?
The answer is that they can afford it if they want to, just like they can afford to buy an expensive lobster meal in Iowa. Who doesn’t complain about what the garage charges for changing your oil? Everyone knows that you need to change your oil, or you void the warranty.
People complain because it’s something they need. Rarely do you see them complain when they are buying something that they want. Who makes more money in a year? The Mercedes dealer, or the same town’s bread baker? Bread is a necessity; the Mercedes is a want.
I don’t want this to sound like blasphemy here, but stone is not a need; it is a want. And people expect that when they pay good money for something, it should look good all the time.
And why shouldn’t they feel that way? Most will realize (as much as they will complain) that it needs to be maintained by professionals to keep it looking spectacular. When it’s restored, the customer gets that feeling again like he had when it was new … the feeling he had when he bought what he wanted.
This brings me to you as a stone restorer. Why shouldn’t you be compensated for what you’ve accomplished? Why should you let someone on the East Coast dictate what you, out in the middle of the country, charge? Are you a commodity? Are you me?
Do you incur extra fees for shipping product and machines to your door? Do you have to fly 1000 miles and spend a week off work to update your knowledge and skills every year because in this industry, trade schools are not on every corner? (Nor do they need to be, I might add.) All of these factors need to be accounted for to come up with the answer to what you’re worth.
How much equipment is invested in your business? What is the cost of replacement? What will it be in five years? You have to prepare for the future. or it will wake you up out of your daydream by dumping a figurative bucket of cold water on you.
Now, sit back and figure out – really think about this – what you’re worth for a day. Now add about 50 percent. Are you worth $1000 a day? $2000?
Don’t brush that off as a billing that’s impossible to attain. I know serious restoration contractors who command much more per day. You won’t succeed if you continue to undersell yourself, or just charge what your competition does.
Once you know what you’re worth, you have a staring point to figuring out what to charge for a job.
Let’s talk for a minute about perishable goods, which is what makes live Atlantic lobster so expensive anywhere but on the East Coast. We know that, as stone restorers, we won’t rot or die in a few days like a lobster – but do we consider this?
Restoration is a hands-on business. Someone needs to be well-educated on stone and its makeup to be able to understand how to fix it.
Anybody can learn how to apply a crystallizer; the same way as any restaurant can open a can of processed lobster meat. With lobsters or stone restoration, the customer wants the better of the two options. That’s why they came to you; they want their stone to last forever, and they want a real restoration contractor.
If they ask you why you are 2X the price of the canned and processed crystallizer contractors, that’s a buying signal. Perhaps they have never tasted fresh educated restoration and they need to understand the difference.
Once someone has tasted real live Atlantic lobster, it’s hard to go back to canned again. Give them a taste of the difference, and be logical and reasonable – not argumentative.
And, in a way, we are perishable. Ideally, we only have 35 to 45 good revenue-earning years in us. If we didn’t inherit a family stone business, chances are we’re down to 25 – 30 moneymaking years. Time is something that we cannot get back – ever.
Are you planning for tomorrow? If you know what you’re worth today, but not budgeting and pricing for tomorrow, where will you be in five years? How about 10 years? Will you be down to 15 -25 years left to plan for retirement with more debits and no savings?
How is living for today good for the customers? Even if you do great work for a low price, if you’re not in business five years from now, your customers won’t get the good care you currently offer. This is not a win-win situation. You need to know your immediate costs and price with the future in mind. This is the road to success.
In Part 2, we’ll look at how your worth and costs should relate to your pricing structure.
Until next time, keep your stick on the ice.
Tom McNall is founder and owner of Great Northern Stone Care, a Huron Park, Ontario-based stone-cleaning and -restoration company servicing all of southern Ontario. Tom also offers corporate and private consultation and serves as a trainer for the MIA.