By Tom Grandy, Founder
Do your techs understand why you need to charge what you charge? If not, they will tend to undercharge the customer. It happens every day. Mrs. Jones is 97 years old on Social Security. She couldn’t possibly afford to pay $195 for the repair you just completed. I’ll only charge her $150. Bingo…the profit is gone! All technicians and even the office staff, really need to understand what goes into the company’s hourly rate.
Next time the techs are gathered around, try asking them a few questions. Ask them what they think the company pays a year for Workers’ Comp insurance. Ask them to guess what the company spends each year on gasoline and/or vehicle maintenance. See if they can list at least 15 normal everyday costs of doing business. The objective is quite simple, help them understand some of the costs that go into the hourly rate. It might even be fun to print out a list of overhead costs the companies pays each year. Beside each topic (rent, health insurance, utilities, etc.) list three-dollar amounts, one of which is real. Hand a copy to each tech and ask them to circle the amount they think the company pays each year. Make it a contest. The tech that gets the most right answers, gets a free dinner or whatever you want to use as an incentive.
When the winner is announced simply say something like “You have just seen a list of our basic overhead costs. Now, think about adding the office salaries and your wages to that list and you might just get a rough idea why we need to charge $XXX.XX/hour. If all that gets covered, the company generally generates a X% profit at the end of the year. How you price jobs to the customer matters. If you discount our normal fees it doesn’t take long for the profit to disappear. If there is no profit, the company will soon disappear…along with your jobs!” It might be quite thought provoking and just might make them a little less likely to discount rates in the field.
Need a little more help getting your techs to understand why you charge what you charge? You might want to take advantage of this month’s Website Special which is our steaming version of Why Do We Need to Charge So Much? This program will help your techs, and employees, fully understand why you need to charge what you charge. This program is normally $114.95 but this month it’s only $99.95. Order today!
The second Website special is our online program entitled Five Customer Buying Principles. This is an amazing program that normally sells for $39.95 but this month it’s featured at $29.95. Sign up today and listen whenever you have a half hour or so to spare. You will be glad you did!