Posted by Ken Wainwright
on 1/17/2012, 2:34 pm, in reply to "rate check"
2.24.4.27
Hi robd
This is a personal overview of our industry.
Does it really matter what others charge?
Can you truly compare your rates with theirs?
I'm going to ramble on a bit about my own experiences here in England.
I live in what many would consider to be a small 3 bedroomed house in the middle of the country. It's worth about £250,000. When I had a mortgage I was repaying £120 per month.
Somebody I know in Scotland (not a carpet cleaner) has a significantly larger house, with 4 bedrooms, 2 bathrooms, a double garage and about 1/4 acre of garden. The property is worth about £160,000 but his mortgage repayments are closer to £1,000.
This persons household income is perhaps double or more my TURNOVER, let alone my net profit, but I have more disposable income because of my low overheads (both personal and business)
So...... if this person was a carpet cleaner of equal to myself and with a similar business model, how relevent would it be to compare our prices? You are not comparing like with like.
I have an approach to my business which means I have no idea what my competitors charge. I don't really care. I know how much I need to earn to give me the lifestyle I have, so work to that.
I have a pricing policy which means I increase my charges every year. This year it's upholstery, next year it will be carpets. Even if I have a really good year and my bank balance is better than my forecast, I still increase my rates.
Every one of us needs to have a reasoned approach to our prices/rates. How much does it cost to "buy" your customers? ie all forms of advertising and marketing. How big is your trading area? The bigger or more congested the area, then the higher the cost in fuel and time spent travelling to/from jobs.
I truly believe that there are too many of us who don't charge enough. Why? because we're frightened of rejection! We will never, ever, convert every sales lead. So accept rejection as part of the job.
There are those of us who SELL to our prospects as opposed to those who just INFORM them of a price. The SELLERS tend to have a higher conversion rate and higher returns than the INFORMERS.
The SELLERS tend to spend more time with their prospects and with the higher returns, do not need to complete so many jobs per day. For myself, this tends to be one job or sometimes two per day.
The price INFORMERS typically need to be in and out as quickly as possible as they need many more jobs to make the business work. They don't have as much time to build and develop a business/customer relationship or to upsell.
How many of us struggle to pay the taxman? For people like myself in the UK, we pay all of our income tax in two lump sums, January and July. It hurts to write the cheque, but it hurts even more if you haven't charged enough all year to allow funds to be set aside for this purpose.
Ditto for new machines, repairs etc. etc. My view is that when a business is established, as our equipment is relatively low cost, except for vans and gas guzzling truckmounts, all should be bought from savings and not from borrowings. It makes for a good business model.
So, in conclusion, set out your own business plan, each year if necessary, and set your rates/charges to that. And don't worry about what others charge as it will almost certainly have no or little relevance to YOUR business.
Safe and profitable cleaning
The Ken
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