When Should You Prioritize Price Increases?
An HVAC Contractor in Georgia asked:
Should we increase prices while business is hot, even if it were to take away from our productivity in the short term?
EGIA faculty member Gary Elekes started by asking how long a business should go not receiving compensation equal to the value of the services it is providing.
“If that was me, I would establish new prices tomorrow morning,” said Elekes.
Elekes continued by adding that a multitude of other problems can stem from not charging the proper rate, including cash flow, profitability, recruiting and paying comparable salaries in your market. “I can’t imagine there’d be a higher priority than this,” said Elekes.
Elekes the moved on to address that sometimes in business, we put off certain items simply because we aren’t fully aware of what we need to do to achieve them. Instead, Elekes says that we need to recognize this and push through so as not to delay important business processes.
“A confused mind says no,” said Elekes. “If you don’t have your information for cost, I can totally see why you would pause on that, and use the idea of weather as a reason why I shouldn’t make that change.”
Elekes reiterated that if one knows that raising prices needs to be a high priority if a business owner knows that their rates are too low.
Furthermore, Elekes stated that almost 100% of the businesses for which he has consulted underpriced themselves.
“It’s almost always a problem,” said Elekes. “And it always comes back to the same issue: they simply do not have access to good information.”
Gary Elekes is serial entrepreneur with a passion for helping others become more successful by sharing what he has learned over the past 3 decades working closely with all facets of the contracting industry. During his career, Gary has held senior management positions at Lennox and Service Experts.
Our faculty members have also answered questions on other topics related to sales in the contracting world, including Charging Late Fees and Are Our Prices Too High/Low?.
Hear more from our “Ask The Experts” faculty members on “Cracking The Code,” our weekly web series.
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