Are you a commodity?

Marketing is one aspect, but there are many more things involved: Is your sales process set up to handle volume, and avoid custom? Is your production set up to reliably deliver a small profit in a short time? Is yout "customer experience" set up to be quick and inexpensive? Are you big enough to be the number 1 in your area? Then you're set up to do money at the commodity end.

My point was that if you offer "the going rate" you're in the commodity side of the spectrum, and you had better done all the things needed to make money on low margins. If you are set up as a boutique shop while offering "going rate" prices, you just won't last long - you'll be losing money on every sale.

If you're set up as a boutique shop, you had better have your marketing, sales process, and installation process match your "niche" and be able to charge the kind of prices that a boutique shop requires.

Again, I think MikeNZ's approach is a pretty sharp one - find the customers that can pay the prices you need to charge, and be flexible about the opportunities that come up.>>>

I believe when prigz talks about being a commodity this is the message . marketing. IMO.http://www.literaryreview.co.uk/tudge_07_09.html 10 % upper crust unconsciously or consciously,use their disproportionate wealth to ensure that they stay at the top, and the rest of us shouting 'Foul!' does no good at all - as the history of the last few years and most strikenly the new President on the American scene surely demonstrates. The real issue here is not scientific but moral: should society be more egalitarian? Plato thought not: in defining justice he expressly rejected equality. Nietzsche thought the world ought to be ruled by a tough and talented elite. So we come to the core question of all politics that was posed by Lenin: 'Who whom?'

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egg Said: CIAK, you are talking about PRO BONO work. That has absolutely nothing to do with this discussion. Come on, now. Way back in the day troop and all the rest of us discussed the difference between business and charity. If you run your business in a disciplined way and not as a charity, you can afford to give when the opportunity presents itself. Otherwise, the customer gets the wrongful impression that we are the ones who need the charity. I had a client recently ask me if I was charging enough, considering all the extra things I was doing that werent part of our original agreement. I replied, If I let you pay me for everything I do, then I cant give you anything can I? We were both very happy with, and conscious of, what we got. A little partnership with people is better than charity, better than griping, and better than getting rich. We all hold hands and eventually we die. Cest la vie. By the way, I agree with you (assuming I understand correctly) and have LONG been a fierce opponent of the one-size-fits-all spec or approach to the roofing biz. Thats my niche: you tell me what you think you need and Ill tell you what I think your legitimate options are. I dont sell anything unless its hope for a roof covering that works with the other parts of a house and hasnt been beaten into submission with a big stick. You know, something that will make you smile and feel good instead of cringe or frown. Thats my niche. I enjoy it, it feeds me, and Im very very good at it. Its not a job, its a career.

egg Pro Bono is with out compensation. In the model I pointed out there was a small profit and of course if history repeats itself new relationships more " boutique " work. I spend nothing for advertizing . This is my advertizing budget . Referals. Sometimes I could use more discipline . Others it is just business . Partnership with people is a reality we all have to deal with no matter what our life work or profession . Like or not . Prigz said no man is an island till they fart :laugh: :laugh: I enjoy the things that make me smile and feel good. You understood what I was trying to get across. If this business doesn't make you smile if you are not making a difference then I would suggest getting out. I have read too many replies and topics filled with unhappy tones . The disconnect between the business and the soul is obvious . It may be time for these to reevaluate their carriers. When I became unhappy with roofing as a whole I reevaluated my life sold everything ( but myself )found a carrier I love . I found my soul again and now I dabble in the profession I once loved . Picking and choosing the work I want and referring the rest to a like minded soul . It is about being connected to the community I love . Making a very decent profit in money and relationship . Being flexible is the key . One size does not fit all . XXL or S There are other sizes in between IMO ;) ;) ;)>>>

CIAK, you are talking about PRO BONO work. That has absolutely nothing to do with this discussion. Come on, now. Way back "in the day" troop and all the rest of us discussed the difference between business and charity. If you run your business in a disciplined way and not as a charity, you can afford to give when the opportunity presents itself. Otherwise, the customer gets the wrongful impression that we are the ones who need the charity. I had a client recently ask me if I was charging enough, considering all the extra things I was doing that weren't part of our original agreement. I replied, "If I let you pay me for everything I do, then I can't give you anything can I?" We were both very happy with, and conscious of, what we got. A little partnership with people is better than charity, better than griping, and better than getting rich. We all hold hands and eventually we die. C'est la vie. By the way, I agree with you (assuming I understand correctly) and have LONG been a fierce opponent of the one-size-fits-all spec or approach to the roofing biz. That's my niche: you tell me what you think you need and I'll tell you what I think your legitimate options are. I don't sell anything unless it's hope for a roof covering that works with the other parts of a house and hasn't been beaten into submission with a big stick. You know, something that will make you smile and feel good instead of cringe or frown. That's my niche. I enjoy it, it feeds me, and I'm very very good at it. It's not a job, it's a career.>>>

pgriz Said: Chuck, the second scenario is actually a business calculation - if I do good work here, I will get followon work that will easily compensate me for the lost revenue. But how willing would you be to do the work if you knew that there was no follow-on work? That's where we as individuals have to make the decision whether we will give away our labour/services for much less than they are worth. The answer may still be yes - but it is a personal decision, not a business decision.

Chuck, the second scenario is actually a business calculation - if I do "good work" here, I will get followon work that will easily compensate me for the lost revenue. But how willing would you be to do the work if you knew that there was no follow-on work? That's where we as individuals have to make the decision whether we will give away our labour/services for much less than they are worth. The answer may still be yes - but it is a personal decision, not a business decision.>>>

pgriz Said: Chuck, I think we will both agree that if this is the typical customer, then we will go belly up. If this was someone who knew me, and approached me directly, then I would treat this case on an exception basis. I would make sure that my financial commitments are covered (by paying customers who meet my business criteria for doing business), and do this work pro-bono at the end of the month. I cannot ask my workers to work for free, nor can I ask my suppliers to give me product for free just because I plan to do good work with it. So it will come out of whatever net profits remain.

However, your example does not shed much light on our discussion of having the business set up to generate profits whether it is working on a commodity model, the luxury model, or something in-between. If company A was set up to get reasonable profits based on the commodity price/high volume model, then they would not have time to spend doing repairs. In fact, if they knew that this customer would need that kind of service, they would pass this customer up. In company B was set up to do boutique work - highly specialized, and customized, but at a price, then they too would probably pass this customer up because they would not meet their business goals.

twill twill I really had hoped you were beginning to understand Ciak. :woohoo:

I'll try shed more light on the model that works for me . This one case would be applied to the company A model. As a commodity this model there is not very much profit in it and your are correct it would definitely not be very long before a company using this model as the only one would be out of business soon . Now how this works in reality . By helping this person I will generate the B model customers and referrals abound. The high end customer that live in this neighborhood appreciate that someone cares for the community and keeps the standard of living comfortable for them. It is all pretty tenuious and is word of mouth. This particular property came through my very good friend an architect . They know I will work on projects in the A model. I won't take any or very little profit and pay my help a good wage on this project .>>>

Chuck, I think we will both agree that if this is the typical customer, then we will go belly up. If this was someone who knew me, and approached me directly, then I would treat this case on an exception basis. I would make sure that my financial commitments are covered (by paying customers who meet my business criteria for doing business), and do this work pro-bono at the end of the month. I cannot ask my workers to work for free, nor can I ask my suppliers to give me product for free just because I plan to do good work with it. So it will come out of whatever net profits remain.

However, your example does not shed much light on our discussion of having the business set up to generate profits whether it is working on a commodity model, the luxury model, or something in-between. If company A was set up to get reasonable profits based on the commodity price/high volume model, then they would not have time to spend doing repairs. In fact, if they knew that this customer would need that kind of service, they would pass this customer up. In company B was set up to do "boutique" work - highly specialized, and customized, but at a price, then they too would probably pass this customer up because they would not meet their business goals.>>>

I want to put your theory to a test Prigz . Ok ? I already know what I will do in this situation . I would like to know how you ( anyone ) would handle this . A older lady has a property in my community. It is in disrepair . She does not have a lot of money to spend on the repairs . She hired her son to try fix the residence . He started the repairs and through an accident ( not on the property or connected to this repair )had to have one of his legs amputated . Using your business model how could you handle this . It is a 30sq roof , a lot of wood rot boards . I 'm wanting to understand the difference between community and or profits . Is there any room for this in your model . I doing this on the fly and it may be unintelligible . I understand it.>>>

The point is that you can make money anywhere on the pricing continuum, as long as you understand what you're doing.

At the commodity end, you need high volume, standarded production, strict cost controls, and no surprises. These are barely-ripe tomatoes in your local big box store.

At the luxury end, you focus on very specific niche markets, much of the time you're dealing with a relatively rare and inaccessible product, and you've selling something that is associated with your product or service, but not the product or service itself. It's the quality of the experience that justifies the price. These tomatoes will be vine-ripened, delivered to you wrapped in gold foil, picked at the peak moment of perfect ripeness, and grown on an organic farm that practices the most pesticide-free growth methods possible.

But if you don't respect the demands of your price-point, then you will lose money very easily.>>>

To quote prigz in another thread. " if you want to sell at a higher price, start thinking about who your customer actually is, and what they really want. They are not buying shingles. They are not even buying a roof. They are buying (depending on the customer) the look, or the security, or the value, or... And it is up to the company doing the selling to decide which element to emphasize, and how to wrap up the whole experience to ensure that the "customer experience" delivers." I would go one further and add one thing . The community is also to be consider . If the same contractor who sells on the level prigz is selling his idea ,finds a customer who legitimately cannot afford the service ? In my community I will as stated go to the place the customer needs . To keep the continuum and quality of life and not walk away. It is not always about the moment or YOU or us !!!!!!!!!!!!! IMO>>>

Good enough prigz. I find my self on both sides. When the occasion requires I'm in the luxury sedan or Lamborghini ( inelastic ) market. If my son or someone I want to benefit with a roof for what ever reason . I have and will go to the commodity Hyundai model. I'm very very flexible . Only because I don't have to be one or the other. Flexibility is really where it is at in this market . Not one or the other. Flowing between both as the occasion presents itself. This is only possible if your model is not dependent on a singular market and you have the finances to flow . Diversification has been the model for me . Being singular in the attack creates a nerve racking and pressure that not many can think straight when things get tough . Being smart is the key . IMO>>>

..I'm a luxury, for sure, any fool can see that....>>>