1. Build Your Perceived Value
A concept I have discussed in many of my past articles is “perceived value”, which is essentially the value that clients associate your service with.
What’s important to know is that perceived value is not based solely on your price. It’s actually based on three things:
The reason building up your perceived value is important is because it is the key to standing out in bid invites and is what ultimately allows you to win more jobs on your own payment terms.
The value of this can’t be overstated.
Winning more jobs at higher prices than your competitors is what every contractor should be striving for and it’s actually simpler than you might think.
To increase your perceived value, it’s all about the follow-up. After you bid and throughout the whole construction process, make sure to call your client often and visit when you can. Also, doing simple tasks like providing estimating services is another great way to remain in your client’s good graces.
Just like that, you differentiate yourself from 90% of contractors and set yourself up for more jobs in the future with those same clients.
Many contractors underestimate the power of being on a client’s “contractors list”. Many employers such as architects have a list of contractors they regularly go to for jobs. Building your relationship with these clients is the key to getting unlimited leads for free and scaling your construction business.
2. The Break-Even Method
This second tip is more of a practical one, as it’s a strategy you can use when bidding on a job for a new client.
For new clients, all they have to judge you on is your price, so at this stage of the sales process it’s actually important to be the low bidder.
But don’t be mistaken, the break-even method doesn’t mean you have to always be the lowest bidder, it simply is the best way to get your foot in the door.
The method is simple: bid your first job with a new client at almost 0% profit.
This may seem counterintuitive, but this method makes it impossible for other contractors to compete with you and allows you to start building a relationship with your client.
If you’re worried about the profitability of the break-even method, remember that contractors typically make back 10-30% profit in change orders. Anticipating the power of change orders, you can bid much lower than you might think.
The best way to achieve this step is to cut back on your profit, overhead, and supervision since these are the only costs contractors tend to differ with each other on, as opposed to their hard costs (materials and labor) which usually can’t be altered.
3. Put it all together
As you may have noticed, building your perceived value and the break-even method work together like two peas in a pod.
By charging at cost, you are able to “get behind enemy lines” and begin to build your perceived value through following up with your client.
Although the way you implement these two steps may be different for every contractor, one principle remains the same: you have to play the long-game.
Building a construction business that gets good, quality work on a regular basis is not easy, but it’s only through dedication and sacrifice that you can find the right clients and begin to score more jobs.
The Secret to 10X your Construction Business
If you are interested in growing your construction business, I’ve prepared a short training video for you that you can watch for FREE: