Sometimes the only thing you have to do to get your customers to pay you more money…. IS TO ASK THEM FOR IT. Why as firewood entrepreneurs have we pigeonholed our prices to the point of earning minimal profits? We need to break the mold and start earning real profits from our profession. But how do we start?
OK, so if your firewood price last year for a full cord of wood was $195, you’re not just going to double it this year without loosing a significant portion of your existing customers… I get that. BUT – what if you start catering to market IN ADDITION to your existing customer? Maybe most of your customers buy 1, 2 heck – maybe even 3 cord per year. That’s great. I remember the days of getting all excited when a customer would call-in to place a big order. Man, all I saw were dollar signs! But what’s the first thing one of those ‘bigger buyers’ usually asks for? …yep – a DISCOUNT!! It makes logical sense from the buyers standpoint, quantity discount.
Let’s be honest, in most areas that burn firewood across the U.S. last year – there was wood shortage. We all know the story of supply and demand… LEVERAGE IT TO YOUR ADVANTAGE. The very first year I wanted to dramatically increase the margins on my firewood business I changed ONE SIMPLE THING – the quantity by which I sold my wood…. PERIOD!
You see, I began explaining to my customers that there was a significant shortage of wood in the previous year (which there really was). This left many people without any firewood. Bear in mind that I market my firewood to people using it for ambiance/social setting… NOT HEATING THEIR HOMES! Why you might ask… because they’re willing to pay more for it! With the stage of the firewood shortage set, I would then proceed to tell them that I have a limited amount (don’t we all?) of firewood to sell for that season. In an attempt to share my fixed amount of wood with as many of my great customers that I can… I had to stop selling the larger quantities of wood to single buyers. Most understood. Those that didn’t, well, they’re most likely not willing to pay us the kind of money we deserve to earn in our industry.
So here’s what happened. I used to sell wood by the 1/3, ½ and full cord. I immediately stopped selling the full cord. Shortly there after, I even added the ¼ cord. I didn’t want people to feel that I cranked my prices through the roof in just one year… so here’s what the price structure looked like:
|Quantity||1st Year Price||2nd Year Price|
|Full Cord||$295||Not Available|
|¼ Cord||Not Available||$115|
Notice the marginal increase in price from year one to year two. Guess what? …I still sold a ton of full cord orders in year two. Yep – I offered it to them @ 2x’s the ½ cord price. So, what used to be selling for $295 in year 1 was suddenly selling for $410 in year 2… A WHOPPING 39% INCREASE IN JUST ONE YEAR! Here’s the other awesome thing: toward the end of the season when people were nearly out of wood but still wanted to have fires, they didn’t want to buy that monster load of wood and sit on most of it all summer. So, what’d they do… yep – they bought the ¼ cords! I can’t tell you how many ¼ cords I sold in the first year. Ta boot, 4 x’s my ¼ price of $115 = $460/cord. That’s a far cry from the $295/cord I was getting a year earlier.
Back to my initial point – sometimes all you have to do to get your customers to pay you more money is to ask them for it… in a bit more of a creative way?