FAQs - My Customers are Asking for Price Cuts, What Can I Do?

Q - Hey Jim,
Some of my commercial & residential customers are starting to ask for price cuts because of the current financial situation. I only factor in a modest profit margin to start with & really can't afford to cut my price.

What can I do?

A - Trust me, you are not the only one facing the same situation. With the recession, and budgets being tight, customers, including yourself, want to find a way to get a better deal.

In this current economic climate, many of us would find to find a way to knock off a few dollars, go the extra mile and hope this would translate into more work down the line.

But this would be a serious business mistake.

Here is something I learned from surviving years in business. If you are asked to reduce your price, you need to make a corresponding reduction in the value you provide.

It is that simple! Reducing service hours will translate into cost reduction. However, cost very carefully to make sure you are reducing cost areas that are labor intensive rather than product intensive.

Only the reduction of labor costs will allow realistic price reductions.