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The Emporer's New Clothes


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Dear Ellen,

I crunched the numbers. I came up with a selling price that is three times the going rate in my market. My competitors have been in business for a hundred years and they seem to be doing OK. What am I doing wrong?

Your truly,

"Crunchy " in Muncie

Dear "Crunchy,"

Remember the story of The Emperor's New Clothes? The punchline is that everyone knew the Emperor was naked but they all thought that the other guys were 'smart' enough to see his clothes. Once the brave young lad in the crowd shouted out, "Hey, the ol' geezer's naked!" then the crowd was free to say, "Well, he is!"

Don't assume that the competition, the other guy, knows what he is doing in his business. Don't copy his selling prices because I bet his prices have no basis in reality. He made them up. He figured the other guy knew what he was doing and copied his pricing.

No wonder so many businesses stink. The Emperor is naked, my friend. Your competitor may no idea what he is doing. You can make money. You crunched the numbers. You now have something to aim for - your financial goals. Good for you. Now keep score and run your Balance Sheet and Income Statement every week. Compare actual numbers to your budgeted goals. If you are reaching your goals, terrific! If not, raising your prices is an option.

The key is to charge what you must and figure out how to add so much value that your customers say, "He is expensive. But he's worth it because he doesn't waste time (shows up on time, works without making a mess, knows what he is doing, is the only guy who understands radiant in this market, etc.)"

Xoxo$$,

Ellen

Got a tough question? Bring it on! If I don't know the answer, one of my smart friends will...and I'll share our advice right here!

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