I just read a great post over on Chris Brogan’s blog that discussed Price Points.  Apparently, quite a few of his other readers were shocked to find what he charges for a day of his time – $22,000.   Chris went on to give some direction at how he sets him pricing.  Chris doesn’t want hundreds of people signing up for a day of his time.  He wants two to three each month.

It all goes back to value.  When you are setting the value of your services or products, what is it worth?  Chris is a well known business strategist, but lets look at this same scenario in a typical small business – for instance a contractor who does home remodeling services.

Let’s look at two scenarios.  Jim Contractor has ten different jobs working at the current moment.  In order to win the bids on the jobs, he had to be the low bigger.  His expected profits was cut to the bone and he has to work around the clock to get them done on time – and if his budget is off – he will likely lose money on a few of the jobs?

Bob Contractor has only three jobs in process right now.  When he bid the jobs, he priced the jobs so that he could make a nice wage once the jobs were completed.  His prices were more expensive than Jim’s and he had a higher profit margin.  Bob has time to excel in not just the quality of his work, but also in building a relationship with his customers.  He is able to give them comfort that the job is being done right – providing that extra little bit of value in the eyes of his customers.  He also does not have to worry as much about making an error figuring up his job cost – if he is off a little bit, he isn’t as likely to go into the hole.

Who would you rather be – Jim or Bob?

There are thousands of Jim’s out there – fighting for that customer who is always looking to pay the cheapest price.  He is always struggling to win bids and a typical dinner time conversation is how he keeps getting underbid by his competitors – ultimately resulting in him lowering his prices even more.    Jim is selling a commodity.

There are only a handful of Bob’s.  Bob creates value for his customers.  I suggest you strive to become Bob.

If you have been excluded from the education tax credits in the past, the new credits may now change that.  The new American opportunity credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The American opportunity credit, in many cases, offers greater tax savings than existing education tax breaks. Here are some key features of the credit:

• Tuition, related fees, books and other required course materials generally qualify. In the past, books usually were not eligible for education-related credits and deductions.

• The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.

• The full credit is available for taxpayers whose modified adjusted gross income is $80,000 or less (for married couples filing a joint return, the limit is $160,000 or less). The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.

• Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student. Existing education-related credits and deductions do not provide a benefit to people who owe no tax. The refundable portion of the credit is not available to any student whose investment income is taxed at the parent’s rate, commonly referred to as the kiddie tax. See Publication 929, Tax Rules for Children and Dependents, for details.

Tax planning may be in order to see how this credit change effects your tax liability.  As we have discussed in the past, we do not recomend overpaying your taxes this year in case federal or state governments decide they may repay with I.O.U.’s.  With tax planning and coaching, we can help you adjust your withholdings to increase your net pay now instead of being at the mercy of the taxing authorities to grant you your own money back in the form of a “refund”.

Next weekend (Friday, August 7th through Sunday, August 9th) is a Tax Free Weekend for both North and South Carolina residents.  For a listing of 2009 Sales & Use Tax Holidays in other states, visit:  http://www.taxadmin.org/fta/rate/sales_holiday.html

North Carolina
G.S. 105-164.13C provides an exemption for certain items of tangible personal property sold between 12:01 A.M. on the first Friday in August and 11:59 P.M. the following Sunday. For 2009, the dates are Friday, August 7th through Sunday, August 9th. Clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreation equipment of $50 or less per item, computers of $3,500 or less per item; and computer supplies of $250 or less per item will be exempt.

Clothing accessories, jewelry, cosmetics, protective equipment, wallets, furniture, items used in a trade or business, and rentals are not covered by the exemption and will be subject to the applicable tax.   For a more detailed list of what is and is not included in the Sales Tax Holiday, visit the list of items exempt during the sales tax holiday.  For other information, visit the North Carolina Sales Tax Holiday FAQ.

South Carolina
SC Code Section 12-36-2120(57) provides an examption from the sales and use tax for any sales taking place during a period beginning 12:01am on the first Friday in August and ending at twelve midnight the following Sunday on (a) clothing; (b) clothing accessories including, but not limited to, hats, scarves, hosiery, and handbags; (c) footwear; and (d) school supplies including, but not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes, and calculators;(e) computers, printers and printer supplies, and computer software; (f) bath wash clothes, blankets, bedspreads, bed linens, sheet sets, comforter set, bath toels, shower curtains, bath rugs and mats, pillows, and pillow cases.  The exemption specifically does NOT apply to jewelry, cosmetics, eyewear, wallets, watches, furniture.  The exemption also does not apply to items placed on layaway or a similar deferred payment and delivery plan, the rental of clothing or footwear, or and item the is purchased for use in a trade or business.  For a more detailed listing of items, read the SC Revenue Ruling 05-09.

UPDATE 7/31:  The House just approved $2 billion in additional funding for the Cash or Clunkers Program.  Will the Senate Save it?

Original Post:

I was about to do a lengthy post on the Cash for Clunkers program when I see that FoxNews is reporting that it is dead. 

“Congressional officials say the government plans to suspend the popular “cash for clunkers” program amid concerns it could quickly use up the $1 billion in rebates for new car purchases”

“Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns of large backlogs in the system, prompting the suspension.”

The program, officially named the Car Allowance Rebate System, was set to end after the government had burned through $1 billion in rebates or November 1st – whichever came first.  The plan allowed for rebates of up to $4,500 for trading in older vehicles for more fuel efficient ones.  It only took an estimated 6 days to burn through the cash.

I will save my detailed post on the program, and post it if and when they inject more cash into it.  It doesn’t take a lot of persuasion to convince President Obama and Congress to throw a few billion dollars here or there, so maybe they will do something to extend it.  For now, it appears halted at midnight tonight.  I do applaud them for taking the measures to “halt” the program and keep it within its specified budget.  I will stop short of saying it should have been budgeted for in the first place.