We’ve all been in the situation where you’re faced with bidding to high and losing the account, or to low to make it worth it. The issue with having bidding that’s off is you’ll either get stuck, or you’ll grow in customer base, but not profits. If you’ve found yourself getting caught in the trap of taking lowball bids, you’ll find that you can’t do things like hire employees, or invest in your company. It’s important that you have pre set margins so that you know that the bid will be profitable.
The foundational belief that we’re going to start with today is knowing who your ideal customer is. There are potential customers who are only interested in who can get them the lowest prices, however you’ll find that not only providing a higher level service, but also a community and company that your customer enjoys being a part of can be much more profitable and fun. Start by finding a niche, then find out what your niches biggest pain is, and find a unique way that you can solve it. Cleaning will always be a ten or twenty dollar an hour job, where as solving someone’s pain can be priceless. The trick isn’t to get the wrong customers to pay the right amount, but rather to educate the right customer on how you can solve their pain.
Another idea that you may need to change, is the idea that you can make a bid based on feelings alone. If you have someone that can’t afford to pay what you need to hit your margins, then they won’t serve you as a customer. Your customers should understand that operating a company cost money, and that you need money for resources if you want to provide them with adequate service. Once you find their pain, your focus should be completely targeted on that, rather than the money. If you have a customer that you really click with that can’t afford your services, it’s better to negotiate on the services rather than the price (i.e one less cleaning a month).
The next concept you need to get over, is overhead. Too many people out there think that it’s not a real expense, and that they can bid lower and circumvent it. Mike teaches a 50% costs to goods sold, so 30% for overhead, 20% for profit. It’s important to keep in mind that overhead is a very real expense, and if it’s not then you’re doing something wrong. You should have things like insurance, uniforms, client attraction, etc. If you don’t have systems in place like that, then you have a cleaning job.
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