Carpet Cleaning Business Management / Hard Floor Maintenance

The Difference Between Price and Cost

April 2, 2012
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When I speak to realtors or referral sources or prospects, I always emphasize the difference between price and cost. Your clients need to know there is a huge difference and they ought to know what the difference is.




When I speak to realtors or referral sources or prospects, I always emphasize the difference between price and cost. Your clients need to know there is a huge difference and they ought to know what that difference is. As Yogi Berra once said, “Their similarities are different.”

My company charges just about the highest prices in town, and for good reason. We call every client a couple of days after the job to insure their satisfaction. We also call prior to the appointment and send out “thank you” letters after the job is completed. Our technicians are all certified and uniformed, and our five direct-drive vans are cleaned daily. Consequently, we have won many prestigious awards over the years, including the coveted “Torch Award for Marketplace Ethics” from the Better Business Bureau. In short, we do a bang-up job and charge a high price for it.

My market is the “Cadillac” market and that’s where we want to stay because the benefits of dealing in that market are vast. There is less competition, those clients are not that concerned about price (they are concerned about time and quality), they are loyal and they are usually found through a referral source. We charge $0.29 per square foot for the downstairs and $0.34 per square foot for upstairs carpet cleaning. We are in Pensacola, FL, where the cost of living is not too high and, consequently, those are high prices for our area. Those prices are a wall-to-wall charge, not to be confused with cleanable square footage, and we tell our clients that we assume that 40 to 50% of the room is furniture. If the house is empty, we charge the same price because you know that an empty house is far easier to clean than one with furniture, even though you will clean more square footage. Also, we seldom move heavy furniture, as most clients are not concerned with that issue.

So what does all that have to do with price versus cost?

Plenty.

And I will explain that to you so you can explain it to your clients.

We recently decided to take our fleet of 11 vehicles to the most expensive car repair shop in town for regular maintenance. Their price is the highest in town, but the overall cost to our company will be less. Let me give you an example: When we took our first vehicle in, the manager told us that the tires needed to be rotated every 10,000 miles. This initial cost of rotating the tires will increase the invoice for that day, but our overall cost will be less because we will go through less tires. Less tire purchases for 11 vehicles is a substantial savings. Why didn’t the other, less expensive, mechanics tell us about rotating tires? This new company is all about quality service and in the long run they will cost less because of better service. In fact, probably a lot less, even though they are the most expensive place in town for car repairs. So you can see from this one example the difference between price and cost.



Last week, I sponsored a realtor event and I told them the story of the new car repair place that we were taking our fleet to. I used the example of the tire rotation to demonstrate the difference between price and cost. I went on to say how we are more expensive in price than most, but your overall cost will be less when you use our company. Here’s why:

• There will be less re-do’s because we are more qualified, knowledgeable and competent than most.

• When there is a problem, we will step up to the plate and fix it. As a matter of fact, you won’t have to call us to complain because we will be calling you first to see if everything is OK.

• You can count on us to show up, and to show up on time, because that is how we do business.

• Our technicians, vans and equipment are all top-notch, less likely to breakdown and you will love the professionalism of our staff.

• And one more time, we are going to call you to insure 100% satisfaction. That act alone will place us in the top 3% of all service companies. When was the last time a service company called you to see if you were happy? By the way, the car repair place we use does call us every time they complete a job. Nice…and somewhat shocking.

 

Here’s one more weapon in your arsenal to explain to folks why you charge what you do. I had a client complain the other day about what she thought was excessive pricing for a $2,000 water damage job. If you are in the restoration industry, you probably hear that complaint more frequently than you would like. I told her the price is what it is because we have to make sure that the job is done right. If not, mold could show up and now the cost in further repairs, and perhaps health issues, would be significant. Doing the job right takes a lot of training, knowledge, schooling and equipment. It is not cheap, and therefore, neither is the price. I closed my explanation to her with a little story about Salvador Dali. One time someone asked him to sketch a drawing on a napkin. He did it in about two minutes, handed it back to the person and said, “That will be $50,000.” The person said, “That only took you two minutes to do.” Dali responded by saying, “No, that took me a lifetime!”

If you are good, charge for it and be able to explain to your prospects the important difference between price and cost.

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