Pricing

[Infamousdave]

I started a pricing thread many months ago and got a lot of good ideas. I think I have settled on a pricing model similar to what Ray Branch posted and would like some more input in case I am forgetting anything. I'm partial to some sort of room pricing because I just don't think that I want customers trying to measure their own square footage but I wanted something that takes care of a minimum charge right away so that is why I was partial to Mr. Branch's method.

Remember also that this is just an add-on service for my wife's existing cleaning business, plus there is very little competition in my area and what competition there is seems to be charging at the top end of some of the prices I see in other areas.

My prices:

First room $79.00
Each room after that $29.00
1 hallway free
Stairs $39.00?

room=200 sq. ft. or less

The townhouse that I recently cleaned was quoted by a steam cleaner in the next town over for $220.00. Using my pricing structure I would have come in at $195.00.

Any comments or suggestions?

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[ChemBright]

Looks like a good pricing structure if it works for you. Also looks like it did because you were the one doing the townhouse. Not the other guy. 

[Big O]

Raise your prices.

I think you should be $25 - $50 higher than HWE.

There are a lot of benefits to VLM and I've found that people will spend more for them.  But I don't know your market or how you've positioned your self.

[CACBServices]

You can use square foot pricing and not have to measure. Customers fall into two categories. They expect per room pricing or they expect square foot pricing. In our area it's almost always square foot pricing. The exception is when they come to the northwoods from large metro area. Up here we don't have high volume franchises forcing prices way down. With those customers, either way I price it's too high. So, when a customer calls and I even get a hint that they are price shopping I use a scripts something like this:

"I'm guessing you are shopping around, and that makes perfect sense. I can tell you is that my prices are xxx per square foot for average soil loads and that includes removal of about 90% of what people consider to be stains. My prices are set at or slightly lower than the area average. If it is important to you, please confirm this by calling other vendors. And as you are talking with them keep in mind that ... (now list the benefits they will not get from other vendors.)"

Then just be quiet and let them talk. Often, they will make the decision to book with you right then. If they say they are going to shop around ask when (not if) you can call them back to talk about what they learned. Make that follow up call so that you can learn what your competition is doing well.

Of course, you gotta know what the competition is pricing.

[Infamousdave]

Raise your prices.

I think you should be $25 - $50 higher than HWE.

There are a lot of benefits to VLM and I've found that people will spend more for them.  But I don't know your market or how you've positioned your self.

I would love to raise these prices even higher but I'm just not completely sure what the market will bare yet. I know the HWE guy was higher but he was giving the estimate as a vendor that was being recommended by the realtor she is using to sell her home. I'm not sure if he bid the job normal or if he upped it a bit thinking she was just going to use her no matter what.

I would also love to go with a sq. ft. price and forget all of this room size jargon but I just don't want to confuse people. I would love to just charge .30 - .35 cents a sq. ft. and be done with it. Maybe its more possible than I thought since Eric seems to be having good luck with that method.

[Wayne Miller]

Don't over complicate things.  People just need a price.  How you get there is academic and if it's not based on what you need to make a living what's the point?

To "take care of the minimum charge" why not set a minimum charge based on the minimum amount of time you can get in and out of a job and what you want to make per hour?  If you're old and slow like me and you know you're going to be there for at least an hour, if not an hour and a half, and you live in a high rent district like me and need $100/hour or more, set your minimum at $125.  If it's an issue when they call tell people your minimum is $125 and let them worry about it.  If the job is close, if it's a repeat client, if you're sitting around twiddling your thumbs you don't have to beat them over the head with it.  You can waive it.  It shouldn't be an issue that often.

Several years ago I knew this fellow, D i c k Ragan, was crazy because he was telling us we should all be charging 50 cents PSF.  I knew no one would pay that much for carpet cleaning.  That is, right up until my wife gave me the ultimatum of "we need to make more money or I want to do something else" and we started to raise our prices.  I'm a slow learner so it took a couple of years or so but I did finally realize D i c k was right. 

These pricing games we play in our heads are for our benefit, not the customers.  They just want a price.  They don't value our service the way we do, chances are they value it higher than we do.  We wouldn't pay "this much" for carpet cleaning and project that assumption on our customers.

People will pay for the things they want.  When you see families in nice neighborhoods with $70K plus of automobiles in the driveway, big screen TV's, pictures of their cruise and skiing vacations, nice furniture, kids in college, so on and so forth they're telling you they have both the means and the desire for nice things, things that make them feel good.  Clean carpet makes a lot of people feel very, very good.

We learned the hard way you'll never know what the market will bear until you push the envelope outside of your comfort zone and have the guts to stick with it.  You don't have to repeat our mistake.

[CACBServices]

Like Wayne, I do have minimums. However, I disagree that "they just want a price" and this may allow us to go to .50/sq. ft. I am winning work on a .03 spread between myself and competition. This spread goes either way. If the customer is price shopping, they buy for .03/sq. ft. less than the competition. If they are value shopping and they understand the benefits of VLM, they will go up about .03/sq. ft. before they start getting hesitant about paying the extra. For almost all of my new customers, they know nothing about VLM. That is why I remove the purchasing risk with a good guarantee. What your market will bear has a couple variable. Firsts, in comparing apples for apples, your price will be compared to other carpet cleaners and their is an allowable ceiling (customer imposed) beyond which you won't win business. However, when you compare apples to oranges and can do a little education with the customer you open new market by introducing benefits that haven't experienced before. How do go from being an apple to an orange? Better value. Focus on dry times, professional image, customer relationship building beyond what your customer is doing. Whatever will differentiate you from the competition. Once you are comparing apples to oranges (you) your ceiling for pricing goes up and maybe as high as Wayne .50/sq ft. Why? Because the customer no longer has a reference point for pricing because your services are much more valuable.

[Wayne Miller]

What I meant when I said people just want a price is you can do something like this,

First room $79.00
Each room after that $29.00
1 hallway free
Stairs $39.00?
room=200 sq. ft. or less

and play with the numbers hoping you can find a mix that works in your favor most of the time or you can simply measure it up and tell them how much it is. 

We walk through with the customer, measure the areas and tell them we measured up about XXX square feet, our basic rate is $$ per square foot, there are  XX steps at $$ each, it works out to $$$.  What we charge is based on that job.  Over the years we've looked at different schemes of pricing for no other reason than to relieve our own anxieties over giving people a bigger number than we're comfortable saying.  The answer for us was overcoming those anxieties.

Most folks really don't care how we arrive at our price, they just want to know what the bottom line is.

As far as PSF pricing goes, it's meaningless.  We seldom say much about it other than to let people know how we calculated the price.  It's what you turn per hour that counts.  If you need $125/hour and can do that at 20 cents you've got a competitive advantage over some old guy who needs something closer to 50 cents to do the same thing.  What I hate to see is someone charging what the industry was charging 20 years ago because of the downward pressure they feel from B&S advertising. 

For whatever reason carpet cleaners seem to think the cost of cleaning carpets should always stay about the same.  For years, I was one of them. 

[Big O]

Try quoting around.40 to .50 psf and totaling the price than give them a 20% discount for being a first time client.  You'll start at a higher psf plus you'll get a raise when you return.  If you just need jobs to get cash than price a little lower and work them for upsells, protector, and referrals.  Winter is a great time to upsell.

[Jose Morales]

Look up citrusolution. They have a good price structure. I was using that when I was cleaning carpet.

[noweare]

That formula is good very close to my pricing.

[Infamousdave]

Look up citrusolution. They have a good price structure. I was using that when I was cleaning carpet.

Do you have a link for this? I don't think I am finding the right site.

[jtmellon]

Price with what you feel good with.  Only you know what you need to feed you family.  Years ago on Rick G's fourm I posted about getting my first job with my new Cimex for 75.00 (it was a small eye doctor shop) man I was eaten alive.  I heard stuff like your hurting us professionals by pricing so low and my van does not move out of the drive way for anything less then 200.00

Well the 200 a job guy is no longer in business and I am.  Thing is in a perfect world people will pay anything you want to charge.  In my world meaning (south jersey) they don't.   I have had to adjust my prices do to the bad times.  Do I still cahrge 100 for 3 rms  and get no calls or lower the price and still work, I went for the latter and I am doing well at it.  I plan to one day raise my prices again, just not now.

I know what I need to feed my family and you do to.

[Infamousdave]

Just to follow up, I have been using square foot pricing since January and it is working very well. I was afraid that customers would want me to do an estimate but I just explain that I will measure and give them a firm price before I start and so far everyone understands.

[Mike M]

Just to follow up, I have been using square foot pricing since January and it is working very well. I was afraid that customers would want me to do an estimate but I just explain that I will measure and give them a firm price before I start and so far everyone understands.

That's what we always did for residential and it worked great for us.