When you run any business, a big question is how much should you charge. If you are a retailer, the pricing is pretty straight forward and you make a profit depending on the number of sales as in product based business you can set a bottom line. But, if you run a service based business, like plumbing or accounting or law firm, then it is another ball game all-together.
The price of your services decides the customers you attract to your brand and the profits you make.
– Who is going to purchase your plumbing service? Whether your business is located in an upstate area or in the suburbs will make a difference. Suburban home owners look for reasonable prices, while upstate home owners can afford the bump in the price. Is your regular service call more expensive than other plumbers or cheaper, and if you provide great service with value than you can charge a premium.
– What’s the quality of service? This goes hand in hand with price. If you decide on a high price, you must offer quality service and that does not just include the project, but customer service, punctuality, meeting all of the customer’s demands, etc.
At the heart of it, these two points of who is your audience and what is your quality of plumbing service will guide your price. Price will set your business standard and customer expectation.
Other things that matter for your pricing are:
What are the local industry prices? What are your competitors pricing or have you done competitive mystery shopping? By pricing below your competitors, you open yourself to the market that they are missing or by charging higher. Most service based businesses take the industry average price and build their own pricing around that. You could do that same.
Break Down your Own Costs
This simply means that you calculate the resources being used for the project and come up with a total cost. This includes the plumber, the equipment, raw material and time utilized. Your price should cover variable and fixed cost thoroughly.
Build a Pricing Strategy
And now we come to pricing strategy. Take a step back, look at the big picture and you get yourself a pricing strategy.
– You can offer cheap rates from small plumbing projects like fixing faucets and setting up water heaters. The advantage is that you reel your customers in with a small project and impress them with quality service. What will happen is that they will tell others about you, and you can charge them a higher price for big projects like refitting the plumbing system and fixing basement floods.
– You offer seasonal rates or emergency services. In the high season, when your plumbers are in most demand, you charge a high rate. In the low season, you charge a low rate. Again, because customers gained in the low season may carry over as customers of the next season.
– You stick to a consistent set of prices that don’t alter.
– You have flexible pricing depending on the customer’s requirements.
Often, price is the last factor for customers to determine whether they hire you or not. If you nail the pricing, you will be able to close more plumbing deals rather than just letting them hang at a plumbing inspection or quote stage.