Price Not Caused By Advertising Costs
Contractor 20/20 Proves That Advertising Costs Do Not Create Higher Prices
Note: this was originally a post I made to the ServiceRoundTable.com. As president and owner of Contractor 20/20 , I’ve had the opportunity to develop expertise in many areas of advertising and marketing and want to share my knowledge with every contractor who needs help.
A RoundTable member posted (name deleted) his advertising all over the place. He is spending bags of money each month on radio ads. I have friends and family repeating his slogan to me constantly. Who do you think pays for all those ads? There seems to be a concept implied here that advertising cost drives up prices.
I answered in my post:
That is dead wrong…
Let me prove it.
Which is more of a factor to drive up prices? The 20% new customer acquisition cost of advertising to keep the men and trucks and staff you have busy or the 40% of uncovered overhead cost and 25% labor cost per unsold hour waiting for the phone to ring?
Don’t forget about the fact that as a percentage of sales, overhead can often drop by adding another truck, given that you have sufficient space and supervision already in place. In both of these instances, it is less expensive to advertise and achieve what economists call ECONOMIES OF SCALE rather than abide with wasted time and economical potential growth.
Call Contractor 20/20 for all your marketing and advertising questions. I’ll be happy to visit with you to discuss how we can work together.