Pricing Jobs

   The question was asked, by a workroom who really needed to get some experience and some work, if she could lower her prices more than she already had. Here was my response to her:

    Having been in that situation myself (desperately needing to get some work, and nothing's working) I can certainly sympasize with you. Also, in having been through it myself, I know from experience, trying to get jobs from a feeling of desparation didn't work for me.
A Word of Caution
    I have a word of caution. Don't price your jobs real low out of desperation! It will come back to bite you! Here's my experience: In the years past whenever I would really need the work, I would keep lowering the price (in my head) before I even told the client the price. I just had to have the job, so I would price it real cheap. Then the client usually said something like, "I'll think about it and let you know." And I wouldn't hear from them for at least a few weeks. Then, when I had lots of other work in the shop, they would come back and want me to do it. But then I wouldn't want to do it because I coudn't afford to do it as cheap as I had priced it. What could I do, I was stuck!

Believe me, I know what that feels like. But I have a suggestion (which may be very difficult). Step out of your "Got to get that job" mentality (which is a "desparation mentality") and step into the mentality of "What do I need to do that job correctly?" Then I might suggestion that you price the job three different ways:

  • Way 1: made very simply, no skirts, no welts, and no separate cushion covers.
  • Way 2: made very simply, no skirts, no welts, but cushions are covered separately
  • Way 3: made with separately covered boxed cushions, skirts and welts, etc.

There can be other variations of this as well.

What should you do Now?
But then you might say, You've already given her a low price (and want to lower the price even more). What do you do from where you are right now? I would recommend that you NOT lower your price any more, but that figure out whatever cost saving methods you can (such as when you elimated the serging), or not making separate cushion covers. Figure out how you can make it as simple as possible. (no welts, no skirts, as few seams as possible)

I find that when the customer doesn't want to pay my price, while keeping my regular service at full price, I often offer them realistic cheaper alternatives. Giving them the cheaper alternatives emotionally helps me to feel better about charging full price for my regular service.

Sample Comparison Estimates
As an example, here is a comparison estimate that I created for a client. This sample estimate is available here as a pdf document, or here as an Excel spreadsheet document. This will give you an idea of how I sometimes handle giving comparison estimate (so I can be my own competition). In this estimate, the client wanted an estimate in covering all their furniture in wool fabric with wool padding, and also, how much would they be in leather. I knew that the price would be so expensive that there would be no way that they would do it. It took me a week (of struggling with myself: I didn't want to put all that work into making 8 estimates, since I "knew" that they wouldn't want to do it. I also had to figure out how to give the estimate. After the week, I finally decided to do a spreadsheet estimate. Also, although they didn't ask what my "regular" price would be (covered in standard materials and using standard padding), I added the "standard" price for my sake. Since I gave them the alternative of the lower regular price, it gave me the confidence to create the estimates for both the wool fabric and the leather. And they have told me that they want to go ahead with covering it in the wool fabric.

Take Heart!
I said all of this to encourage her to take heart. Don't be afraid to charge your full regular price. And also to give them some cheaper alternatives (which I've listed above).
You might also consider making out a spreadsheet with prices for doing it several different ways. This way, they will be deciding whether they want it done the simpler way, or to pay for the more fitted look.

Using Downtime
    During times in the past when I was out of work I would fret a lot. Usually my downtimes don't last more than a few days at most. But, when I don't have anything to do, it's very easy to get all worried and think "I'm going broke", "How am I going to pay rent" etc. Eventually my smart wife (wives are wonderful!) began to encourage me to use my downtime productively. Keeping busy helps me keep my mind out of the gutter. Also, there are usually MANY things that I never have time to do when I'm busy. Having some faith (realizing that, "No, I'm not going broke, customers will be coming again.") helped me to begin to use the downtimes better. In fact, during the last few years, I've began to look forward to down times, which give me some time to organize my business better. Here are some of the things that I do when I run out of work for a few days:

  • Examine my business: When I'm really busy, it's sometimes difficult to keep perspective. Am I doing what I want to be doing? Where can I improve what I'm doing?
  • Clean and organize the shop/workroom. When I'm busy, there are areas in my shop that develop clutter, that I don't clean very well. Having some down time allows me  time to do a better job of cleaning, or to organized my supplies better, etc.
  • Work on developing better paperwork. I use this time to see what I'm lacking in paperwork, and to such as improving my work orders, creating better price lists, etc.
  • Bookkeeping: There always seems to be bookkeeping that needs to be caught up. Never seems to be enough time to do it all. So, I sometimes use my downtime to catch up on bookwork.
  • Do Jobs for own house: Some of us don't seem to take time to do our own furniture. When I have no work, I sometimes take that opportunity to work on some upholstery/slipcover project for the house.

When I use down time to improve some aspect of my business, then those rare times of "no work" become a blessing rather than a curse to endure. During the last couple of years I've only had perhaps a couple days when I didn't have client's work to do, so I didn't have much time to work on this stuff.

    One of the most important aspects of developing any business is advertising. I also use downtime to examine my advertising. What types of advertising am I doing? What types of advertising is available in my area? What can I do better?
    We spend about $250 to $300 per month year round. We advertise when we are very busy as well as when we are slow. This is part of what keeps work coming in year round. This is how we advertise:

  • Newspaper: West Salem, where we live, has its own montly newspaper, which serves about 10,00 families. We put  display ad (about 2" high by about 5" wide) and this costs us about $60-80 per month. We keep it running all the time. We've had people tell us that they had cut out our ad and had it on the refrigerator for a year. They knew that someday they call us, and the did.
  • Telephone Directories: We have the smallest size of display ad (1/16th of a page) that we could get. We run this ad in two telephone directories.
  • Word of Mouth: Yes, I've heard from many people that word of mouth is the best type of advertising. I agree. However, clients die off, or move away. I've never found that word of mouth alone would give me enough work. Also, word of mouth, as an advertising source, takes years to develop.
        To me, the realization the power of word of mouth helps me to realize that every client should be treated honestly, forthrightly, and to do the best job that I can. Every job can come back to bless me or to haunt me.

More Advertising Thoughts
Focused Advertising = Focused Results. Assuming there is a large enough customer base in the area, we can advertise for the part of the upholstery that we like to do, to the exclusion of other areas. For example. I don't like to do automobile upholstery (yes, I know, some of you love to do autos). What I like to do best is household furniture and RV cushions. This is what I advertise for and these are the types of clients that I mostly get.
Able to choose specific jobs: Advertising brings us in enough potential clients that we can be more picky about the jobs that we do. We can take the jobs that we like better, or that we do best. We can turn away jobs that we just don't want to do. Before we started advertising I often felt that I had to try to get every job (and thus beat myself down on the price). Now, since we constantly get some many calls (mostly from the ads), we can charge a better price (more that we used to charge) and we can refer jobs that we don't want to other shops.
Consistency of Advertising: We find that having our ad in the newspaper builds customer trust. Many of the clients have seen our ads for years. They know that someday they will use us, and they do. By seeing our ad in the newspaper every month, they see us as consistant, dependable. even before they actually ever come to us
You Get The Type of Customer That You Go After.

For example, if you advertise that you are the cheapest shop in town, then the type of customers you will get will be the ones looking for the cheapest price. (and often will try to get the price even lower)
However, if you specialize in quality, such as advertising that you do quality work (and then making sure that you indeed do quality work) then those are the type of clients that you will get. These type of clients are willing to pay more to get the quality workmanship.