Setting expectations with contracts early and maintaining good communication with your clients throughout the process will make for happier clients and help you achieve more referrals. More importantly, you’ll have more control over your day-to-day business. Consider the following when determining if contracts can help your business.
It’s all About Balance
Managing the ideal balance between expectations and reality with homeowners can be tricky. You want to be there for your clients and be able to achieve their dreams. But you’ll also need to talk directly about prices and be straightforward with your clients. It would help if you communicated your costs efficiently while also setting fair prices for your services. Use contracts to help.
Negotiating the prices of your products or services with homeowners can be complicated. Businesses have to explain the process behind fixed prices, labor costs, and material costs. Not to mention the expectations behind the project and why your company is the best solution.
Contracts Help to Establish a Winning Price Strategy
It would be great if companies could set a price one-time, and it would work, but it’s not realistic. When presenting pricing to potential customers, you’ll often have the chance to gain crucial feedback on your price strategy. Take time to adjust your prices accordingly because the growth and survival of your company can depend on it. Miscalculating your prices can lead you to make last-minute changes that can be detrimental to your business for the following reasons:
- If you feel the need to lower your prices, how will you offset the reduction? Forecast the loss of income with an increase of material cost or increase of customers. And then determine how realistic that is. It may take several iterations and some creative thinking to make it work.
- And if you have to raise your prices, your current customers may not understand that increase, and they may feel cheated and disappointed. Be sure to explain the increase in value to the customer. Does it help you maintain service levels? Does it help to assure the product quality?
These are a few quick reasons to discuss your company expectations, client expectations, and prices well from the beginning.
Leverage your Hard-earned Solutions Portfolio and Reputation
When purchasing a new TV, we as customers look through user reviews and develop a sense that a well-known brand will inevitably cost more than a lesser-known brand because of the reliability that these more renowned brands have built for themselves. The exact process applies in the contracting world.
Homeowners Pay More for Value
Homeowners are willing to pay more for contractors with a good reputation and better product expertise than other contractors. For example, not many contractors are capable of doing copper gutters or metal roofing. Contractors with a portfolio of work that other contractors don’t have can leverage better pricing and better terms based on their expertise.
Leverage Manufacturer Price Increases
Due to the aftermath of COVID-19, 2021 is the year of price increases. Increased costs on safety precautions, raw materials, and transportation have left us wondering when things will turn around for the better. The good news is that homeowners can see the light at the end of the tunnel. Presenting price increase letters to your clients will increase your chances of negotiating the right price for your company.
Four Advantages of Contracts
- Detail specifics for customer agreement – A contract will list the client’s needs and expectations of the contracted company. Efficient communication will build a stronger bond between the client and the company, therefore leading to a greater chance of increased negotiation. Often, when a contract is not included in the sales process, the communication line is severely distorted, leading to many inconveniences. The breakdown of the costs and prices will instead be individualized, causing room for price discrepancies. There may be severe issues or disagreements when delivering the final work because it was not negotiated.
- Eliminate surprises for a great customer experience – Prices should be initially set and agreed on before production begins. When everything is sorted out beforehand, the client will always know exactly how much they will be spending or investing and why.
- Help keep projects on schedule – Setting a contract is successful time management. Deadlines and timely expectations should be discussed right after prices are set. This way, you will not have to argue with the homeowner if the work or materials are delayed for reasons out of your control.
- Detail homeowner expectations – Contracts detail items the homeowner is responsible for, i.e., storing valuables before the project starts, such as grills, landscape decorations, paintings on the interior walls, or decorations that are hard to replace. This way, you are not responsible for any damages.
And you? Do you usually make contracts with your clients? Tell us in the comments.
Related: Five marketing tools that every business should know about. Read the full article.