Finding the right balance between pricing your services and maintaining a good close rate can feel like an impossible puzzle. Just because you have a high close rate doesn't mean you're maximizing your revenue. In fact, chances are you're losing out on a lot of profit by charging too low. But finding the right balance for you is possible. It all starts with having a solid process in place.

Start with Lead Volume

To experiment with your pricing, you need to be confident you’ll have more leads coming in. Without a consistent way of generating leads, focusing on pricing might not be effective. First, solve your lead generation consistency. This gives you the volume needed to experiment with your prices and find the right balance.

Understand Close Rates

The industry standard close rate is around 35%. A healthy close rate is between 40-50%. If your close rate is over 50%, you might not be charging enough. Consider raising your prices until your close rate falls into the 40% range. As your skills improve or market prices rise, you may need to adjust your prices again.

Finding Your Baseline

Use PCA standards and other online resources like Angie's to understand price ranges. Painter groups online are also useful for comparing bids and staying competitive. Remember, closing over 50% of your jobs often means your prices are too low while closing fewer jobs might mean your prices are too high.

Pricing Process Consistency

Before experimenting with pricing, ensure you not only have a consistent lead generation process but also a structured way of producing bids. Use labor rates and standards to develop a pricing formula. This consistency allows you to adjust your pricing in a structured way, ensuring you’re not just guessing. Otherwise, your experiments have no structure to them, it’s just all guesses.

Finally: Experiment with Pricing

Once you have a steady flow of leads and a consistent pricing process, you can confidently experiment with your prices. More than anything this is adjusting your markup from bid to bid to see the impact on close rate. Then you can answer for your company: “When I was at 100% markup, what was my close rate vs bids with 80% markup?” This helps you find the right balance between pricing and close rate for your market.

Are you trying any of these lessons from this newsletter? I’d love to hear about how they’re impacting your business. Also, would love to hear what you want to hear more about. Reach out to me on Instagram. - John