Rule 3: If you’re not making money, you’re not charging enough.
When I talk of making money, I’m talking of making a profit. It took me quite a few years to understand that surveyors often confuse revenue and profit. I would be leading a discussion about “making money” and everyone but me thought we were talking about gross revenue, instead of profit. I now try to make that distinction clear. So when I say “making money,” remember that I’m talking about making a profit.
In my travels and discussions it has become clear that surveyors are generally afraid to charge enough for their services, and that is the single most important reason why few make money.
The most common excuse is the worry that they will price themselves out of the market. However, upon close examination, no one really knows what the market will bear because no one has ever tested the market. The only basis for comparison is a perception of what other surveyors are charging.
If you aren’t making money, it’s a lot more likely that you are charging too little. I have never heard of an instance where a surveyor has complained about making money because they charge too much. Have you? It’s very common to hear complaints about other surveyors charging too little, however.
Whenever I do a seminar, I often get the opportunity to talk with surveyors and the most common thing I hear goes something like this: “I’m the highest priced surveyor in the valley. I just don’t understand how these other hacks can charge so little.” Interestingly I never hear from the folks who price their services on the low end. Why do you suppose that is? I suppose one reason is that the lowball firms never attend educational functions, but the most likely reason is that no one wants to admit that they are responsible for low prices.
Those who price their services low are running multiple risks. One – they are unlikely to make any money. Two – they are likely to be perceived as discount (read cheap) surveyors. Three – they will never attract the best help. Four – they will be sought out by the most aggravating of clients –the bottom feeders.
Have some courage – charge like a professional would charge.
Are you confusing revenue with profit?
A lot of Beardslee’s rules center around surveyors not charging enough, and trying to explain why this is happening.
This one I think begs the question: do you know what your costs are, and do you even care? You have no idea how many surveyors we talk to that say: “I just watch my bank account every month and see if it’s going up or down”. What they’re actually saying is ”I don’t really care about business, let me get back to my surveying”.
You know what else I noticed? The surveyors who know their costs and care about profitability have companies that are growing, while the ones who don’t are stuck where they are, looking for someone else to blame for the state of their business.
If you want to start making more money, you’re going to need a system that tells you what’s going on in your company in much more detail than what your accountant can provide. It doesn’t matter what system you use, as long as it can do at least these things for you:
- Allows you to see the profitability and health of a job in real-time (right now, not at the end of the month after you’ve added up the hours).
- Allows you to set up the line items and budgets for each job in your job database. When you have a lot of jobs on the go, setting up jobs properly is what makes the analytics possible.
- Allows staff to enter time and equipment charges against the right line items for each job. In the field, today, on their phones, not at the end of the week when they can’t even remember anymore.
- Requires project managers to approve time sheets to stop under-billing. Give your teams the tools they need to be accountable and know that you can see what’s happening inside their jobs.
- Allows you to learn from your past jobs. When you are doing a new estimate, you should be able to look up data on past jobs for a certain area and job scope. Did you lose money on that job? Should you add an extra 15% next time?
In a future post I will go over our vision for what a business system for surveyors should be. If you’re curious to see what’s possible, feel free have a look at the introduction page of our help docs: Overview - Cyanic Job Book