It may be tempting to lower prices in a slow market, but a look at the numbers shows the short-sightedness of that approach. Working your way from Table 1 to Table 3, observe what happens to net profit when you reduce markup without cutting costs (COGS — or cost of goods sold — and overhead): Eventually, you end up paying to do the work.
It may be tempting to lower prices in a slow market, but a look at the numbers shows the short-sightedness of that approach. Working your way from Table 1 to Table 3, observe what happens to net profit when you reduce markup without cutting costs (COGS — or cost of goods sold — and overhead): Eventually, you end up paying to do the work.

Has it ever occurred to you that dropping your prices to stay in business could put you out of business? Many contractors tell me they’ve had to drop their prices to remain competitive in today’s market. They just know they’re losing jobs because the “other guy” is cheaper.

And yet there always has been and always will be someone out there who’s cheaper — in good times and bad. Think back to the good old days, when the leads were flowing in and there were lots of jobs. Because there were so many customers, you probably weren’t as aware of — or concerned about — the ones you were losing due to your prices. But that...

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