A Manifesto for Field Service Businesses That Need to Charge More
Don't be afraid to charge what your business's services are worth.
Raising your prices can be...well, scary. How could you possibly charge that much for a project that will take three hours?
Let's talk about what customers are (and are not) actually paying you for.
Customers are paying you to solve the problem behind the problem.
The problem is not a broken boiler—it's having no heat in January. The problem is not a faulty cooker—it's that the customer can't make hot meals and has been ordering takeout for the last week. So you're not fixing a boiler or a cooker; you're providing home-cooked meals and comfort in the winter.
Customers are paying you to help them feel the way they want to feel.
For example, if someone is buying an alarm system, they may be looking for a feeling of safety and security. If they're paying you to install new lighting in their living room, they could be after the joy they'll feel when they're entertaining in that beautifully lighted space.
Customers are paying for your skills and experience.
There's a story of an old engineer who was hired to fix a ship engine that no one else had been able to fix. The company that owned the ship had tried everything possible to get the engine working, to no avail. The old engineer looked at the engine for a few minutes, then gave it a swift kick—and the engine roared to life.
The engineer presented the boss with an invoice for £10,000.
'Ten thousand pounds!' yelled the boss. 'Just for kicking the engine!'
'It's not for kicking the engine,' replied the old engineer. 'It's for knowing where to kick.'
A similar story has a woman in a cafe asking Picasso if he would do a quick sketch on a napkin. He sketched his famous dove, gave it to the woman, and asked her for a huge sum of money.
'But that took you just a minute to draw!' she complained.
'No,' Picasso replied. 'It took me 40 years.'
The point of these old saws is that what you offer may look easy to your customers...but in reality, you spent years learning and invested thousands of pounds into honing your skill to the point where it looks easy.
Customers are not paying for your time.
If customers were paying you for your time, you should be able to stand there for an hour and collect a payment. Enough said.
Now let's talk about how you can get those prices up to what your business needs to be charging.
How Much Should I Charge?
These resources will help you determine your field service pricing strategy.
Key quote: '[One] reason why people don’t charge what they deserve is that they haven’t taken the time or effort to measure, quantify or identify clearly the key outcomes that they offer. They also don’t know how they stand apart from their competition. What you offer IS different from your competitors, but do you know how, exactly? Do you know what you bring to the table that your top 30 competitors don’t, and can’t? If you know your competitive advantage, are you marketing and promoting it wherever you go?'
Key quote: 'Is your historical pricing adequate to meet your needs? If not, you're undercharging. It's important to identify why, and to correct your pricing accordingly. For example, it could be that you're often called out to diagnose a fault. If so, it’s key that you make clients aware they’ll pay a call-out charge plus an hourly charge after the first hour. That will make your prices transparent from the beginning.'
Key quote: 'You should aim to review your pricing every six months. That way you can keep on top of market changes and amend prices to reflect your costs and changes within your marketplace. This will help avoid the need to make sudden, large price hikes because your prices haven't been reviewed for ages - which will be off-putting to customers.'
Key quote: 'How you price your product will heavily impact how your business is perceived, both by your customers and your competitors. Think about the kind of clientele you want to attract. Do you want to cater for a small group of high-paying customers, or offer a low-cost, one-size-fits-all product with mass appeal?'
Key quote: 'With premium pricing, businesses set costs higher than their competitors. Premium pricing is often most effective in the early days of a product’s life cycle, and ideal for small businesses that sell unique goods. Because customers need to perceive products as being worth the higher price tag, a business must work hard to create a value perception.'
How Can I Raise My Prices?
If you're ready to take your field service business to the next level, check out these resources on how to increase your prices.
Key quote: 'Clarify your actions by making clients aware of the benefits attached to using your service and why it’s worth the increase. You need to make them feel as if they’d be lost without you and that you have aided their development and positively impacted their business. Ideally, you want them thinking: "I’m surprised you didn’t do this months ago!"'
My Step-By-Step Guide to Telling Your Clients You're Raising Your Rates (Without Scaring Them Away) - Jenny Shih
Key quote: 'Crafting an email in just the right way can make a world of difference in helping your clients transition to your new pricing. I’ve asked Kendrick Shope, Founder of Authentic Selling, to share a template you can steal to use when you need to tell your clients about a rate jump.'
Key quote: 'Why does the customer buy from you anyway? Knowing this will allow you to reinforce these points when talking about the increase. You should also have ready at least two key needs of the customer that your product or service satisfies. Be sure all of your strategic information about the customer is up-to-date before a price increase is announced.'
Key quote: 'No one likes being cornered with a "take it or leave it" ultimatum. A price increase is more palatable if there is an option to save money. Even if you don’t expect anyone to take the cheaper option, offer it anyway. Consumers appreciate choices and use the lower price as an anchor reference to base buying decisions from.'
Key quote: 'Start with segmentation As a rule of thumb, the more targeted you can get your email communications, the better. We created 3 groups to announce the pricing change: existing customers, current prospects, and other free trialers.'
Free Podcasts on How to Become a Premium Business...And Raise Your Prices
Listen and learn!
We've created a series of four podcasts that will help you attract upscale customers and become a high-end field service business.