- May 15, 2019
- Posted by: admin
- Category: Accounting Advice
There are some business owners in the PMP industry that cut prices to win business. I can tell you that this is NOT the way to go. Doing so only means that you have to work that much harder to accomplish your revenue goals. Even worse, you run the risk of getting into a price war and I can guarantee that there are no winners in a price war. Instead of competing on price, it is better to communicate and deliver value to your clients. In the end, your customers will be more satisfied, and so will you!
In the beginning when you are building your business, it is easy to fall into the pattern of attacking the bottom feeder market. You do not have to lower your prices – it is a huge beginner’s mistake. A lot of people go through it because it is an easy sale. Drop your price and they buy. But these are customers who do not appreciate or understand the value of the service you are selling here. And dropping prices will eat away at your business’ value.
It is important when you are building wealth in your business that you increase revenues. Your company’s value is measured as your business’ annual revenue multiplied by a certain industry accepted multiple. If you drop prices, you are devaluing your PMP business.
The other issue with pricing services is that you are digging yourself into a hole. So, if you ever want to get to the point where you want to bring them up to a reasonable pricing level, you find yourself in an uphill battle.
“I’ll pay you half…”
A customer that we did pest control services for and owed money once said, “OK, I’ll pay you half of what I owe you and we’ll call it even.” When questioned why we would want to do that, he responded, “Well, I’ll give you a bunch of my other buildings to service.”
“If I am losing this much money on you, why would I want to double my business with you and lose twice as much money?” This way of thinking just does not make any sense.
You MUST sell the results of the system. You improve the Quality of Life for your clients. Do not focus on the price. Sell based on the value that you deliver. YOU OFFER PEACE OF MIND! Be sure to establish credibility and develop solid relationships with you clients. If you do these things price will become less of an issue. And as a side effect, your customers will have a lot more respect for you.
You are entitled to make a good living at what you do. Just make sure all the right messages are communicated to the customer so that they know they are getting value.
Pricing Services for Profit : Selling Add on Pest Control Services
They say that the easiest customers to sell are the ones that you already have. After all, you have already developed a rapport with them and they trust you. Pricing services and upselling to your current client base will reap a high return on your efforts. In addition, as you get more involved with your clients and their lives, your relationship will grow stronger and customer retention will increase.
CAPTURE MORE OF YOUR CUSTOMER’S WALLET!!!
You can only sell so much in pest control services to an individual customer. You must seek ways to capture more or your customers’ wallets. Ask yourself the following questions:
- What is my average revenue per active client?
- How can you increase that average?
- Does your business possess any unused skills or capabilities?
- What additional services can you offer?
Pricing Services for Profit : Achieve Rapid Business Growth
This is a concept you can grow your company on! This is also a great way to combat seasonality in your business. Some good examples of add-on services are Landscaping, Deck Washing, and Sealing, Air Duct Cleaning, Crawl Space Encapsulation, etc.
And if you offer a business that you can plug in during your PMP off-season, that is even better! But keep in mind what is making you money – RENEWABLE AND REPEATABLE SERVICE. Make sure you stay with the service program model since there a lot of these add-on services that need continued servicing. The possibilities are endless.
Pricing Services for Profit :Marketing Initiatives are Inexpensive
Offer a service and market it directly to your current clientele. This simple approach is much less expensive than building a new book of clients from scratch. Your customers know you are reputable and the people you work with are reputable. Your clients trust you and you have built up a lot of equity in that relationship. Well, cash in on that equity and offer additional value to your clients.
Hedge Your Bets!
If you offer a portfolio of pest control services, you are reaching into other market areas. These add-on services can supplement your income during downturns in pest control that may be caused by unforeseen issues such as poor weather conditions or entry of disruptive pest control products or methods. Your portfolio of business lines will make you less susceptible to changing market conditions, in turn decreasing your overall risk exposure.
All in all, be sure you stay with what you are good at, but there is nothing wrong with getting good at other things as well.