How to
Avoid Common Pricing Mistakes As a New Foreclosure Cleanup Business Owner
By Cassandra
Black
How to Avoid "Anxious Pricing" and Account for "Indirect
Costs" in Your Foreclosure Cleanup Business
Following is a common pricing mistake most small business owners make -
no matter what type of business they're in.
Business is about guts. You've developed the guts to start your own
foreclosure clean up business - don't ruin it by pricing yourself out of
business. Follow the advice here, and you'll significantly increase your
chances of being in business three years from now.
Why three years? Because most small business owners fail within this
time period. And, they do so because they severely undercharge, which
leads to cash flow and a host of other problems.
"Anxious" Pricing
Most business owners work from a point of anxiousness, or desperation,
from the moment they open their doors. Hence, they'll take on jobs they
really should pass on to entice customers on board. Their thinking is,
"I'll raise prices later."
The Problem with Anxious Pricing
The problem with anxious pricing is you will struggle to cover those
all-important direct and indirect costs. Most business owners don't even
cover direct costs when they use desperation pricing; never mind indirect
costs associated with cleaning foreclosures.
What are Indirect Costs?
Indirect costs are all the other costs not accounted for in your direct
costs for a particular job, but they are still necessary for you to be in
business. These are monies that have to be spent whether you get
foreclosure cleaning jobs or not. Hence, they should factor into every job
you price.
Some examples of indirect costs are business insurance, phone, gas,
paper, ink cartridges for your printer, and other costs associated with
cleaning foreclosures.
My mother used to say, "How you begin is how you will end." The mother
of three girls, she was talking about relationships with boys but it
applies to anything you do in life. If you start out not charging enough
to cover your foreclosure cleanup costs, you start out in the hole.
Why would you do that to yourself?
Sticking to Your Prices
This is where the guts of owning a foreclosure cleaning business come
in. You have to have the moxie to stick to your pricing guns. If you know
your real costs, this will be easier than you think. And this is why it's
so important when it comes to pricing.
Another reason you don't want to price from a point of anxiousness is
that you train clients how to treat you. This is true in every type of
relationship - business or personal.
If you don't value your work enough to charge what it costs you to be
in business, why would your clients? It's really not easy to raise rates
on clients, even when you let them know they're getting an "introductory"
rate.
Customers for Life
Your idea with clients is to make them a customer for life. Charge
enough so that you can afford to give them a discount down the road if
they give you more business. The reason is, when clients give you bulk
foreclosure clean up business, they want bulk rates. If you start low,
there's nowhere to go.
Not to mention that you'll soon become fed up because you'll resent
working for nothing - literally. You also run the risk of positioning your
firm as lower in quality, even if this isn't true.
To avoid all of this, price your services right from the get-go. While
it may mean losing some jobs initially, you'll be that much happier as
jobs that are priced right start rolling in because you will know you're
getting a fair rate for the hard work you're going to have to do.
Good luck in pricing for profit in your foreclosure clean-up business!
Cassandra Black is the Author of How to Start a Foreclosure Cleanup
Business: FREE
Articles & Advice Blog and How to Start a
Foreclosure Cleanup Business eBook
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