Pricing in the St George construction industry can be challenging as it requires presenting the special value of your work in addition to being savvy with numbers. Because this industry is cost-based, being aware of indirect and direct costs is imperative as you consider overhead and profit while implementing a markup. However, even if you were perfect in accomplishing all of this, the effect of inflation still applies pressure to your business. Inflation is when the purchasing power of money is decreased due to high prices. This must be taken into account when dealing with pricing structures in St George construction. It has an impact on your company’s employee labor cost as well as purchased materials and products. Over time you’ll spend more money for the same thing. Something for which you allocated $100 one year, for example, will yield a lower purchase percentage in subsequent years due to inflation.
Yes, inflation typically operates slowly over a period of time. But failure to account for it in your pricing strategies can be dangerous. The effects of inflation in the course of one single year may appear negligible, but over time it adds up quickly. Many business owners fear that regularly increasing prices will drive away customers. The truth is that inflation is real based on the financial structure of our country and you must be aware of it each year in order to make sound financial decisions. The amount of money your business has will steadily decrease if your prices aren’t adjusted for inflation.
St George construction companies also need to be aware of how much spending power their typical clients have each year. For instance, what is the average household income in the country and locally? Is it rising or falling? You can check the US Census Bureau for this information. Our research indicates that median income has been rising for two straight years. Median is different from average, however. Median simply means the middle. Knowing this information is still helpful because it can be a market activity indicator for St George construction companies. The specific portion where owners should focus their attention are the people whose incomes lie in the upper 80%. This group is typically the focus of most construction organizations. Again referencing our personal research, this bracket experienced an average income increase of 15% between 2011 and 2015. When you consider, even through inflation, that there has been a rise average household income we learn that these folks have more cash available to spend then they did 4 or 5 years ago. This means they are more inclined to spend it on projects that are on the higher end of the spectrum, which is great for St George construction companies.
This is where the benefits of putting a higher priority on selling your value over focusing on price begin to show themselves. By doing this, your customers will simply expect impeccable and professional service and will generally overlook the cost, even though you’ve raised it over time due to inflation. The high-quality product that you provide is really what matters more than anything else. Remember that it is also very important to continually improve your customer service as well as your technical trade skills in light of everything we’ve talked about here. Growth is what St George construction companies want more than anything and this can be achieved by balancing inflation with your pricing structures while simultaneously making your service the best in town.