12 Nov 5 Pricing Tips to Optimize Your Service Business
We’re going to cover how offering variety in your service business pricing is a winning strategy. I’ll also share how I was able to sell a white glove service at 2x that of my competition.
5 Pricing Tips to Optimize Your Service Business
1. Know Your Market
The most obvious first step to pricing is to find out what your competitors are charging. Keep a spreadsheet with all your local competitors on it and call them once a quarter. Keep a tally of what the most popular services are being sold for. Check craigslist for what the low end guys are charging. You should know what services are selling for on the low end and what’s the most anyone in your market is getting for the same service.
2. Cast a Wide Net
I see most service companies segregating themselves into being the cheapest or the most expensive, more often the cheapest. Why can’t you be both?
In your business you should offer prices from the low end to the high end. If you understand people they all have different buying patterns. Some people always want a deal and some people want the best money can buy. Exploit all the buying patterns by offering a few packages at various price points and service bundles.
At least always have 3 pricing tiers for each service you offer.
3. Focus on Recurring Revenue
If you have a service that brings recurring revenue you should always focus on selling that service first. Any service with a monthly, quarterly, or renewal will bring in more revenue in the long term over a one time service.
A customer you interact with on a regular basis is more likely to share your business with the people they know. I recommend steering the conversation away from one time services. Train your staff to do the same when selling services over the phone.
4. Offer a Ridiculous White Glove Option
Here is a firm example on why White Glove options work. There are some customers out there who always want the best money can buy you just need to put it in front of them.
When I started my pest service business I thought of everything I could do for a customer on their property. Most other companies were charging $2500 in my area for an all-inclusive service of this type. What I found is they were doing a lot of work and the money wasn’t really worth it. The companies placed a ceiling on what they charged because they didn’t think the customer would pay more.
I doubled the price to $5000 and offered it as the “white glove service”. At the time I didn’t know if it would sell but I thought it was worth a shot. Within the first 6 months I sold three of my highest end service just by putting it out there. If you don’t offer it, the customer won’t have a chance to bite on it.
5. Keep Testing the Market
Knowing there are many customer types and income brackets, keep experimenting with various pricing. Twice per year I change things up. Look at the services that are your bread and butter and tweak those slightly up or down. Stay on top of the trends in your industry and always test new services. If you aren’t experimenting and trying new things you will sit stagnant and be left behind.