How much of a discount is too much?

There is no universal number. It depends on what the job costs you to deliver, which most owners have not calculated for that specific job. Work out the delivered cost first; the answer falls out of it.

What if I lose the customer by holding my price?

Sometimes you will. A customer only available at a price that loses you money is not a customer you kept, and taking the work means less capacity for work that pays.

Is it better to discount or to reduce scope?

Reducing scope, almost always — provided you say so plainly. The same money for less work is honest. The same work for less money teaches the customer what your price really is.

← Answers

Should I drop my price to win a job?

Do the arithmetic before the decision. Eight points off a 22% margin does not leave you 14% — it depends entirely on how the job is costed, and a discount on top of stale material rates can put you below cost without it showing until invoicing. Look at what the job contains before you look at the price.

A cost taken out is worth more than a discount given away

A discount repeats. It sets what that customer expects on the next quote, and often what your crew hears as the going rate. A cost removed from the job happens once and keeps the price intact — delivery timing, hiring a machine you own an alternative to, a spec the customer would never miss. Look there first.

Check the price still clears, and where it stops clearing

Not "is it still profitable" but what it clears, on what assumptions, and at what point it stops. A price that only survives if the job goes perfectly is not a price that survives. If your material rates are months old, you are discounting from a number that was already wrong.

What it must never mean

Reaching a number by paying people less, running a crew thinner than the work safely needs, or quietly delivering less than you quoted is not a saving. It is the price coming down anyway with somebody else carrying it. If the number can only be reached that way, the number cannot be reached.

The question worth asking yourself

Would you price it there if you had three more of these lined up? If the answer is no, the decision is being made by the gap in your schedule rather than by the job. That does not automatically make it wrong — a slow month is a real fact — but it is worth knowing which one is doing the deciding.

Also asked

How much of a discount is too much?: There is no universal number. It depends on what the job costs you to deliver, which most owners have not calculated for that specific job. Work out the delivered cost first; the answer falls out of it.
What if I lose the customer by holding my price?: Sometimes you will. A customer only available at a price that loses you money is not a customer you kept, and taking the work means less capacity for work that pays.
Is it better to discount or to reduce scope?: Reducing scope, almost always — provided you say so plainly. The same money for less work is honest. The same work for less money teaches the customer what your price really is.

Written for your trade

This is the kind of thing Solomon works through with owners using their own numbers. See how it works →