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How to Double Your Profits

So many building trade contractors I talk to are struggling to make a profit.  Even those who are busy find that their profits slip away during the job, and they end up barely breaking even after all that work.

If you aren’t making any profits, then pretend the title is “How to Make a Profit.”  Doubling zero profit is, after all, not a great accomplishment.

This theme – “How to Double Your Profits” – will be recurring from time to time over the next few months, so stay tuned…

The quickest and easiest way to double your profits on a job is to offer additional or upgraded options to a client.  But your success has everything to do with WHEN you offer buy-up options.

Now, it’s common knowledge that 20% of people will opt for a “deluxe” option if it is offered.  (If you’re not offering an upgrade option on each and every job, then you need to start.)

The problem is that, most of the time, the options are offered during the bid process.  You prepare three bids… a high, medium and low option.  Most people will choose the medium option, but a percentage will choose the higher option, which has greater profitability for you.

It’s sometimes called the “Choose between Me, Me, and Me” strategy.  Unfortunately, some prospects will also go for the low option.

I’ve found the better approach is to offer upgrades to clients during the design phase, or even the build phase.  They have already selected you as their contractor, they trust you, and they are looking to you to offer options to make the project turn out great.

The list of options to upgrade – with significantly higher profitability for you – is practically endless…  cabinets, tile, wall finish, trim or woodwork (a big one!), lighting, plumbing fixtures, and on and on.

One of my clients won a kitchen remodeling job and, during the design phase, threw the idea of putting in French doors and adding a deck at the back of the house.  To him it seemed an obvious thing to do, but it hadn’t occurred to his clients.

They loved the idea and found the money for the extra work.  He got the deck job with no competition.

Another client of mine – a painting contractor – offers upgraded finishes on every single job… but only AFTER they have selected him to do the work.  He tells me about 3 out of 10 go for the upgrades, which have significantly higher profit margins for him.

Keep your eyes open for opportunities to make your clients’ jobs turn out better for them, and you’ll quickly find that your profits on those jobs will double.

By Bernie Heer

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