How to overcome price resistance and make a profit

What the customer wants

The vast majority of customers want three primary needs met when it comes to service:

• Work done promptly and thoroughly;
• Quality workmanship (problems are fixed correctly the first time, with repairs that last); and
• Fair prices.

A service provider simply cannot deliver on the first two points by undercharging the customer. The question then becomes, ‘What does the consumer consider a fair price?’ When customers are offered a $65 or 70 per hour rate—which as mentioned, prevents companies from breaking even—they typically balk. Why should they pay such a seemingly extravagant amount? After all, most pool customers don’t command that type of pay in their own full-time jobs. Even if they do, they probably don’t want to hand over that hard-earned money to their pool technician.

The only way to avoid this scenario is by quoting customers a single, fixed amount for the entire job, as is typically done on a construction or remodel job. The quote should include every possible cost—including all labour, parts and other expenses—and should be delivered before the repair is performed. In the construction or remodel division of your business it’s called a quotation; in the service department, it’s called flat-rate pricing.

Benefits of the flat rate

This system has many advantages. First and foremost, it prevents the customer from nitpicking about an hourly rate or the cost of a given replacement part. With a flat rate, clients are less likely to criticize a technician taking a call on his cell phone or taking a quick break, since they know that extra time won’t be tacked on their final bill. Also, as mentioned, it allows the customer to focus on the quality of the work being performed, rather than counting the minutes and continually tallying his or her bill.

Also, under the guise of a flat-rate system, it is easier to adjust service rates to a point that will allow the company to break even. The customer does not realize the rate is higher; all they see is the final quote.

There are other financial benefits to flat-rate pricing. Each flat-rate repair has a time allotment based on how long it would take a journeyman technician to complete the repair under normal working conditions (with a little extra time added as a buffer). If the technician finds two or three items that need work, economies of scale come into effect, since any decent technician should be able to complete several tasks using less time.