The response will determine your future.
What do you charge?
Want long-term success? Don’t sell price to get business.
By Dick Ragan
The average professional carpet cleaner probably hears the question, “What do you charge?” Twenty times more often than any other. And were you to call twenty cleaners as a prospective customer to ask this question, the odds are each will quote a competitive price.
A quick market analysis will reveal several startling facts in regard to carpet cleaning:
If you analyze each of these five facts you will see, in one way or another, each one ultimately returns to the question, “What do you charge” and to its answer. But the root of the problem runs deeper.
Selling price to get business
A while back, I received a call from a cleaner in North Carolina who told me he was quite successful. He had been in business for sixteen years, was working six units and claimed to be grossing $250,000 a year.
“I think that’s pretty darn good,” he said. However, after a few penetrating questions, I discovered he sold price to get business, was netting under $40,000 and had five kids and a wife to support.
At today’s cost of living and with that kind of personal overhead, $40,000 per year is a hand to mouth existence. Is that “pretty darn good.”
But to this cleaner’s competitors, he would appear successful. After all, he’s a multi-unit operator who cleans a lot of carpet. Consequently, to compete with him, they’re apt to compete on the basis of price, because they want success, too. The irony is, if they “succeed,” they will have failed just as their role model has. Their guiding light spent sixteen years building a business that looks successful but isn’t.
Many cleaners reason: To make more money, you must do more jobs. To get more jobs, they buy a bigger yellow page ad, mail more fliers and lower their prices. And it works. However, the greater their volume, the greater their business overhead: more vehicles, gasoline expense, cleaning equipment, employee salaries to pay, service supply expenses, and vehicle and equipment repair expenses. As a guy who does say... carpet cleaning in seattle - how much extra cash do you really have to throw around?
However, because of the competitive price, you realize less money per job to pay all these bills. Yes, this approach to business building works if your objective is to clean more carpet. If financial prosperity is your objective, it doesn’t.
The less you charge, the less time you can afford to spend at a given service location. But the more soiled the carpet, the more time required to restore it. And the less soil you remove for lack of time, the more displeased or unimpressed the customer will be and the more average you become as a professional.
The more average a cleaner is, the less reason a customer has to call back for future service. When a customer does call back, the low price, not quality, will be the reason. The most you can hope for in building a business on the basis of price is to develop a client base that will keep you very busy working very hard to earn very little.
Net profit determines success
For all the correlated associations in between, net profit is all that matters. Net profit defines success or failure; it determines whether you are financially secure or you’re not. The ultimate correlation inevitably returns to the question, “what do you charge,” and to how you deal with it.
Which would you prefer, to serve 100 new customers each month that pay $20 a room for service, or to serve 50 repeat customers that pay 40 cent or more per square foot? Let me repeat the same question in a different way. Would you prefer to serve 100 customers at $20 per room or 50 at $70 dollars per room?
The latter is obviously preferable, but whether you ever realize this ambition will again be determined by how you respond to the question, “What do you charge” Perhaps a little personal history would provide some helpful insight.
During my first year in business, I was hit with this price question every time I picked up the phone, because I was yellow-page dependent the best source there is for price shoppers. And early on, I discovered that to answer the question was to lose the job, because I refused to lower my charges. So, I avoided an answer with other questions, beginning with questions such as whether they owned their home or were renting, room sizes, the carpet’s age, when it was last cleaned and how.
The customer thought I was just gathering information to assess a charge, but that was not the case. Rather, I was leading her away from her original question to another, which finally came in discerning the reason she had not called the cleaning firm she previously used.
The majority couldn’t remember who had last cleaned their carpeting. What’s interesting is, when I asked if they had been pleased with the work, most clearly remembered that they had not been pleased, although some couldn’t remember the precise reason. Often, they had forgotten the details but not their negative reaction.
Take note of two important points:
Now I’m ready to go back to her first question:
“Ma’am, the first question you asked me was, “What do you charge?” Is it not probable that this was also the first question you asked the other cleaning firms you used? What you must understand is that the service charge determines how much time a cleaner can afford to spend in your home. However, the degree of carpet soiling will also determine how much time is required to restore your carpeting. So, in effect, how much you're willing to spend could easily determine how pleased you’ll be or won’t be with the end result. Yes, I would like to clean your carpeting, but I also want to keep your business, which I can’t do if you’re not happy with my work. The question is, “are you willing to pay me enough to make you happy?”
Sell a service, not a commodity
Involved here are two principles that you should never forget:
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National Trade Publications Inc.