After fielding thousands of calls, winning thousands of jobs, and building a very profitable junk removal company I thought I would share one of my favorite ways to maximize profits. This strategy, if executed correctly, will help determine your customer’s willingness to pay for the junk to be removed from their house, and in turn will help you maximize profits. I find that most people actually undercharge for their junk removal services, and this is a great strategy to implement to make sure you are valuing your work appropriately. It’s a four step process that we have used to bid onsite, and is the only process I recommend for negotiating with a customer at the job site.
Step 1: Always charge $50 more than you think the job is worth. If you think the job is worth $300, tell the customer with confidence the price is $350. You will be shocked how often the customer will agree to a higher price point, and shocked how much of an impact this will have on your bank account. If you complete 2 to 3 jobs per day, or about 800 jobs per year, and 10% of your new customers (80 customers) agree to the higher price point, you will make an extra $4,000 in profits per year. (80 customers times $50 extra per customer = $4,000)
Step 2: If they don’t like the higher price point then offer up a $50 discount. We always said something like… “since we are already out here and it’s almost the weekend, if we can complete the job right now we will knock off $50”. This almost always works, and you will get the job for the exact price you thought it was worth in the first place. However, the customers who like to negotiate lower prices will not feel the need to negotiate any lower because they already feel like they’ve “won”… further maximizing your profits.
90% of onsite bids will be won with Step 1 and Step 2.
Step 3: If they don’t go for the $50 discount, then we ask the customer what they think the job is worth. If we think the job is worth $300, and the customer tells us they think the job is worth $200 we offer to meet them in the middle ONLY IF WE FEEL COMFORTABLE AT THAT PRICE POINT. This is not the ideal scenario, and we would never complete the job if it wasn’t profitable.
Step 4: If there is no middle ground, we tell the customer what it is going to cost them to do the job themselves… “You are going to have to rent a UHaul for $50, pay $20 in gas, and then another $62 in dump fees, and that doesn’t even include your time.” If they don’t come up to your price point after realizing their high cost and significant time commitment then it’s time to walk away and head to the next job.
The benefit to maximizing profits is not only making more money, but you also gain the ability to spend more money on marketing and acquiring new customers. Perhaps its time to get another truck or trailer, buy more junk removal leads, or have a new website built?! Keep building your business and winning more big jobs!