Feedback sought on new pricing strategy

[John Downey]

Am strongly considering a new pricing strategy that I haven't seen tried or discussed before. If anyone has tried it, I'd appreciate feedback on how it has worked. If not, your input and critique of the strategy will be appreciated.

Some background: My company is in a small, rather affluent town in Central Ohio. I've been in business here for 3 years and have a very high market share (my best estimate is 50-75 percent). Almost all my business is repeat or referral. I charge per room rather than per square foot, and I'm not interested in switching to square foot pricing. My price per room varies based on the room type (e.g., family room or living room $59, bedroom $45, great room $79, dining room $39). Currently I charge 20 percent less if the room is empty or if I'm cleaning around the furniture.

What I'm thinking of doing is charging a base price for cleaning, plus a certain amount per piece for furniture moving/replacing/protecting. For example:
Family room- $48 (base price)
Furniture moving- $18 (sofa $5, love seat $4, chair $3, 2 end tables and a coffee table $6)
Total- $66

Rationale: Customers who do a lot to prepare for the cleaning by moving as much stuff out of the room as possible are rewarded with a lower cost. Those who don't, pay more. Also, since larger rooms usually have more furniture, I will charge more for larger rooms than smaller rooms without switching to square foot pricing or adopting the "oversize room" surcharge associated with the price merchandisers. The bottom line: The customer has the choice of doing more and paying less or doing less and paying more.

So what say you, oh masters of clean?

John Downey

 

[John Watson]

A little different way of thinking there bud!!!!

Let me ponder it today while scrubbin.

 

[billyeadon]

pricing

john,

Probably won't be the first time we have disagreed but I still prefer the package pricing which I believe will offer you a better profit.

After reading Predictably Irrational
by Dan Aielly I am even more convinced. I will email you my review of the book.

 

[Mark Imbesi]

I agree with Bill. Package pricing (gold, silver, bronze) and keep it simple for the client. The majority should pick the silver, so keep that in mind when setting your pricing structure.

 

[Guest]

Looks complicated, customers dont like feeling like they are being charged for every little thing, would you? By the foot is much easier for me, they never ask or seldom do. The by the foot price is for me to estimate not to sell it to the customer. This allows me to get and give the price very quickly and it is simple for the customer. They only get the end price. Once I have the square feet I can ad or subtract from the price depending on what they do in each room. Its very simple and fast.

Most people hate to be sold, but they do love to buy.
The art of selling without selling. Ok I kinda stole that from Bruce Lee ( the art of fighting without fighting ) but you get my point.

 

[Supersucker]

You failed to mention if you give pricing over the phone or not.

 

[Guest]

John, I have a menu pricing structure similar to that if you would like to see it.

Just send me a PM.

 

[Farenheit251]

As a consumer I wouldn't know everything involved in cleaning so your price seems fine. But I know exactly what is involved in sliding a sofa or chair back and forth and it would chap my ass to pay $5 for it.

 

[John Buxton]

I used to live in Johnstown. Of course one of my favorite stops was The Buxton Tavern in Granville, and I'd have to get the duck at The Granville Inn. Since my last name is Buxton, I used to have a T-shirt from there.

I price like that now and offer a good, better, best package. I do sf based on wall to wall then ask what they want moved and add basically $1.00 per leg to block or tab, and I may subtract if they dont want anything moved, or have a lot of furniture.

 

[Spurling]

What happens when their $39 dining room is bigger than their $59 living room.. client would say, " Why are you charging me so much for my living room? Im only paying $39 for this room." Charging by the cleanable SF is time consuming .. but the fairest way to charge. Charging to move each piece sounds like nickel and dime-ing.

 

[The Great Oz]

The idea of rewarding a customer with a lower price is pretty common, since you're actually selling time. You mention that you're in an affluent community and your clients therefore would be affluent, so please indulge me a question or two.

If an affluent client typically is not a bargain shopper, why try to get your first quoted price as low as possible?

Affluent people are the least likely to move anything, and will probably feel like they'd better do a lot of your work for you or you'll penalize them by dinking them with extra charges. The observation that no one likes the price to go up, but some like to work it down applies to price quoting in all markets. That is, unless your goal is to never move any furniture ever again, and this would be how you'll train your customers to do it for you.

Why worry about quoting as low as possible when you have the market cornered?

If you indeed have over half of the (mostly repeat and referral) clientele, they should be aware of and approve of your current pricing structure. Once they asked you back the only reason to ask price is to remind them of the cost. Changing your pricing structure will make those customers uncomfortable, and may make them call someone else just to make sure you're not snookering them somehow.

And the first/best question last, why do you want to change?

 

[harryhides]

Sounds way too complicated to me John but having met two Downeys in person now - I`m not surprised - are the rest of you nuts too

How much to move a dining room chair, small, medium, large ottoman, rag doll that fell off the sofa or coffee table with or without lamp - oil lamp will be extra, maàm.

 

[Ken Snow]

Good point T. And what exactly is high end vs low end. Based on some of the pics I've seen posted one persons high end is another persons trailer park.

 

[Lee Stockwell]

The low end of the market is going to laminate.

It will be back to carpet in a few years.

John I think you are worrying too much about the nickle and dime part of bidding. You are making it just a bit too complicated.

We charge a $70 minimum. During the winter our room prices are $49 for the first (250'max) and $29 for each additional area. Most have at least two areas cleaned because it's only $8 over the minimum charge. To make it work you have to charge for hallways and small rooms at the stated rate. For us, each area will go up $10 next week.

I believe that you are better off to just raise the rate than to make it complicated. In Granville, with your reputation, I'm sure you can charge more.

Thanks,
Lee

PS, Do you go to Beavercreek OH?

 

[Kelly]

sounds like the way things are being done right now. well....at least here anyway

 

[John Watson]

Ok, Like Bryan asked, Why do you want to change??? Why not just adjust your prices as you go?

Today, we looked at a job that was referred to us by another cleaning company from another area. This was for an affluent couple in their mid 50's

living room 500sq, MBR TA's 138sq BR TA's 135sq 773 sq total.

We charge .45sq our quote was for $347.85 We drove 35 miles, 50 minutes 1 way. We would have charged this if the job was 5 miles away.

1/2 the furniture was moved out of the living room, we were to move the rest.

This job with moving, tabbing, blocking in all would have taken us about 2 to 2 1/2 hrs.

Sorry to say we did not do the job. We do offer free estimates and we were prepared to do the job at that time and they had pre-moved their contents in preparation for this.

The Lady of the house asked us why did we charge so much? She said they had never paid over $200 for carpet cleaning in their old home regardless how much they had cleaned. I told her these are the prices we charge for our services, I was sorry didn't want what we were offering her and gave her the names of a couple of cleaners that would be less than we were but, not the same quality.

Your prices would have been 59 +36+36=$131Low or $149 High. Dang John, I should have gave her your name wow

 

[alazo1]

Are you doing this because you're finding that you move too much furniture?. If you are you can just wing it. Maybe make your base price with a few pieces of furniture cleaned under. If they want more then add the surcharge after they show you what they want you to move. Figure on how long the additional work may take you x your hourly rate.

Also, I'd just charge per room pricing instead of breaking it down so much. I know you didn't askk but. Have a maximum sft per room (wall to wall). Charge x sft at a pre determined price. Hallways and small bathrooms get the sft price.

Albert

 

[Captain Morgan]

pricing

Hi John,

I've gone back and forth on which way to go.. the previous owner charged by room 12x12 bedroom $35, stairs $35, walk in closet $35 3x6 hallway $35. I tried that but got the hairy eyeball a lot.. it was too hard trying to justify to the client how I could charge them the same amount of money for a 10X12 bedroom and a 12X18 living room. I could tell by the way they looked at me that they expected to pay more for the larger living room, or for that matter, to pay less for the smaller bedroom.

The other observation I had (from Lee's comments) was, if you are charging a flat fee of $49 for the first room up to a max 250 sq ft. then I assume you are measuring to make sure that the room is fitting your pricing guidelines, right? Then, what's the difference.. your measuring to make sure customers fall into your "price per room" system. If your measuring, than measure price by the square foot.. you can't get any fairer than that.

Please correct me if I'm wrong! And let me apologize to anybody who is a successful price per room cleaner, I know there are plenty out there. I guess I don't know enough about how to do it to fully understand to process.

I've had a much easier time pricing by the square foot.

 

[-JB-]

How much to move a dining room chair, small, medium, large ottoman, rag doll that fell off the sofa or coffee table with or without lamp - oil lamp will be extra, maàm.

Tony, I luv ya but your such a douche sometimes!

 

[steve r]

the key i think is not telling them how you charge.just give them the overall price and keep your figures to yourself.same as phone quotes.get the info and give a price dont break it down then you avoid all your trouble your having.

yes some want to know but most wont ask if you handle it right by taking charge of the call from the beginning.

for me most closets and halls are free unless they are big enough to cause concern.most around here arent.

as far as furniture goes i have my room prices but i inform them that moving furniture is extra and will be determined after i see the job other wise my room pricing stands.no set figure for moving anything just depends on how much how far i have to move it and how my back feels.

 

[Jeff Madsen]

John,

If you're going to do what you outlined, I would suggest you keep your current pricing level as your "new" discount level and raise prices for your full service offering. I would suggest you consciously lose market share in order to enhance profitability. At the level you're at I suspect you could raise rates 10 percent, lose a third of your volume and make the same net. It's at least worth looking into. With you doing the work and doing it the way you've outlined in your hot-seat interview you really deserve to be commanding higher rates.

The obvious caveat to this would be if you are trying to build a large
multi-truck operation based on thinner margins and higher volume.

 

[cu]

odin my bald friend ..I AM A HACK...ALWAYS BEEN A HACK ...WILL ALWAYS BE A HACK...BUT IM A DAMM GOOD HACK...i,ll clean a woman's knickers if i get paid for it

 

[John Watson]

Odin, Knowing you go 100 miles for a $50.00 job. I gave her your name and number, she asked where you would be coming from with that phone number, and when I said Bellingham she said "I don't want no foreigners cleaning my carpets" "Don't we know of any local people?" I had to tell her the cheap good guys are agitten harder to finds. Either the died or wents to the poor house broke.

 

[GRHeacock]

Everybody has a different amount of furniture in any given room.

I based my prices on- "Open area" (move nothing, clean around everything present), Wall to wall empty (no furniture) or Wall to Wall furnished (Some to many items) rather on how many items to be moved, or cleaned under without moving.

With certain specialized tools, many items can be cleaned under without moving, which takes less time and effort.

Gary

 

[Ron Werner]

Mike West had a way of marketing to reward people for moving furn.
He advertised 20-40% Off the cleaning.
20% off if they moved all the small stuff and all he had to move was the bigger stuff, ie sofa, loveseat, table, etc
40% off if Traffic area or they emptied the room.
He would price based on the total sf of the room and then adjust accordingly. Of course you would be cleaning more carpet in an empty room but then not moving anything. So set your price so you make what you need to make when at the 40% discount.

Eg 200sf room. Moving Everything, Lets say he charged 60 cents/sf= $120
Less 20% for moving just large items, 48 cents/sf= $96
Less 40% for vacant or T/A's, 36 cents/sf= $72


ANd then of course there is Protectant price :wink:

 

[John Downey]

Sorry it has taken me so long to come back to this. My plate's been pretty full of late.

Thanks, everyone, for your inciteful feedback. (OK, not all were inciteful, but most were!) Several of you asked Qs and/or sought additional info. I'm afraid that trying to answer everyone now would just prove confusing.

The goal of my proposed pricing strategy is to make my price fairer to me and to my customers. I'm not trying to gain market share by offering a "discounted" price. As Bryan correctly observed, my customers don't call me because of price. They call me because their neighbor/sister recommended me. Probably 10-20 percent of my calls are people shopping price. In those cases I almost never get the job. (My prices are a lot higher than anyone else in the area. I recall only one time in three years where I was successful at changing someone from a price shopper paradigm to a value paradigm.)

Many of you suggested I switch to square foot pricing. I appreciate where you are coming from, but for reasons that I'd rather not get into, that's a non-starter for me.

The most compelling argument I've read thus far against my plan is that my customers might view it as nickel and diming them. If that were the case, it would be a major breach of trust, and what success I've enjoyed thus far is all about trust. So I'm going to give it more thought and not pull the trigger just yet.

Thanks again, everyone. And on this day of holy darkness, here's wishing you a happy and joyous Easter.

John D.

 

[Ron Werner]

you could modify (modify everything :wink: ) the 20-40% discount to work with "by the room" pricing. It would be very simple to explain over the phone and their would be no implication of nickle and diming, just your clients seeing that there will be a benefit if they move stuff for you.