Prices are rising. This isn’t a Green Industry thing, prices are just going up. While that sounds bad, it’s actually good news. No, I’m not crazy. It’s how things work. 

Labor is an issue this season, and that means people are doing more. It also means most employees are earning more as well. On top of this, distributors are raising prices (or will be soon) because vendors and manufacturers are raising prices. Everything just costs more.

Americans are Earning More

On average, Americans earned about a quarter of a dollar more per hour in January of this year, up from last year at the same time. That’s with the adjustment from inflation (the dollar loses about 2 percent of it’s value each year). As everyone knows, higher wages bring up the cost of everything else, as buyers can afford it. As we’ve seen thus far, the average American can and will handle the price increases.

Our nation’s economy is based on consumption, not production, so everything is based on consumer confidence, and in 2018 consumers seem to be very confident.

Where is the confidence coming from? Tax cuts led some companies to give more raises, or bonuses. The job markets are strong, there are more people looking for work in various industries with more jobs than workers. When there are more jobs than people, companies pay more to get the right employees. This extra money in the hands of main street creates confidence. And where there’s confidence, the economy grows.

Tariffs on the Rise

Last year we saw tariffs on washing machines increased the cost of products made in China, Mexico, and South Korea coming into our country. A 20 percent tariff on lumber imported for Canada increased the cost of new single-family homes.  Tariffs on imported aluminum and steel (10 and 25 percent respectively) also effected prices. The current administration is looking to put a 10 percent tariff on about $200 billion imports coming to the States from China any day now.

For the past three or so decades, we’ve been building the economies of other nations as they tax good coming from us, while offering rebates to their manufacturers shipping products to us, tax free. The current administration is looking to end the free-for-all into the US, tired of seeing US manufacturers punished for shipping American made goods into these foreign countries. By putting tariffs on goods coming onto our shores they level the global playing field for US manufactures shipping out. The side effect is that it also rises the cost of goods entering the US, affecting US buyers.

How will this Affect Me?

When we get down to it, the one question on everyone’s minds is: how will this effect me? You’re likely already feeling it. As stated, too many in our industry are struggling to find workers. The workers we’re finding want more money, and if they’re worth it we’re paying them very competitive wages to keep them. With vendors charging more, distributors are charging more, and smart contractors are charging more too. Keeping with the status quo pricing means less income for the business. Less revenue when everyone else is increasing simply isn’t good business.

A smart business owner realizes that the value of their service isn’t tied to the price, it’s tied to the service they provide. Low price shaves more than dollars, it also eats away at the quality of what one is buying. After all, quality is the easiest thing to sacrifice with when trying to compete solely on price. Quality, integrity, and the building blocks of success come at a premium. You should be charging for it, especially when consumer confidence is high. Your home owner clients want the best person for the job, to insure their investment (their house and property) keeps and increases value. And they understand that comes at a price. Do you?

 

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