How to handle current price increases
I hope this issue of the Executive Report finds you and yours well. Winter weather caused us to close this month, with some of the most snow we’ve had in a long time. Hopefully, you’ve been able to continue working safely as we move towards another busy metal roofing season.
In the Executive Report’s last issue, we discussed testimonials and their importance to getting you more business. Getting feedback from your customers is crucial to success, and another great way to accomplish this is a survey.
We need your answers for a survey we’re currently running, so click here to fill out a short two-question survey. It will only take a minute and helps us better serve you as a source of essential roofing, marketing, and sales information.
Now on to this issue’s topic: price increases in the market and how to deal with them.
With the current economy, material prices are only continuing to rise across the construction market. Lead times have gone up drastically for some products, and many contractors are changing their prices and completion dates to follow.
As prices increase from your supplier, you raise prices for your customer, who has to choose to buy at higher prices or wait for a decrease. Many customers can’t or won’t wait, so they buy now, even with a price increase.
Here are some ways you can manage these increases to serve your business and your customers better:
- Live in the moment
Price for profitability in the present (say that three times fast!), not how things were months ago or how they’ll be in the future. Quote each job differently than you have in the past because now you have higher costs and need higher revenue to balance things out. Put strict time limitations on the quotes you provide.
- Watch your numbers and profit margin
Keep a close eye on your numbers as you adjust your pricing. If you don’t adjust correctly, checking your numbers can be a great indicator of where exactly you went wrong. Take a big picture look every once in a while to keep track of your overall trajectory.
- Develop cost analysis after each job to make sure your numbers aren’t slipping
Not just checking your overall numbers but carefully identifying areas where costs have increased can help you develop more accurate pricing. Cost analysis is always helpful, and continuing to do it gives you a backlog of costs compared to prices fluctuating. Besides looking at the big picture, doing a cost analysis for every job gives you great detail for every single job, helping you to address issues right where they arise.
- Stick close to your suppliers and communicate with them about price increases
Price increases start with your supplier as materials and products become more expensive for you to offer. Be aware of any scheduled price increases and keep in touch with your manufacturing contacts. Getting your customers the prices you need them to pay as soon as possible makes a big difference in keeping up with increased material costs.
- Encourage customers to avoid future increases by buying sooner rather than later
Creating a sense of urgency towards a purchase is a time-honored technique to drive sales. In this case, prices increase whether you decide to follow suit or not, so communicating the importance of acting swiftly is beneficial to your customers. Not being too pushy, but letting them know that prices are only going to keep going up keeps them in the loop.
- Make sure your sales presentation is as crisp and solid as possible to build your product’s value
Right along with the last point, effective selling is going to be even more necessary than usual. With prices going up, communicating your products/solutions’ value can help alleviate some of their concern over costs. This holds true at any point in your sales career, but continually updating and refreshing your sales strategies to serve your customers better is critical.
As prices continue to increase, both for you and your customers, you can be prepared by keeping a close eye on your costs, pricing to maintain profit, and encouraging customers to buy now before prices continue to rise.
Todd Miller has spent his entire career in the metal building products manufacturing industry. He is president of Isaiah Industries, an organization recognized as one of the world’s leading metal roofing manufacturers. Todd is currently Vice President of the MRA (Metal Roofing Association) and a Past Chair of MCA (Metal Construction Association). Through his website, he strives to raise the bar on standards and practices to provide property owners with the best possible products for successful roofing projects.
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