Are you one of those diehards who will go to the ends of the earth for their customers but lose sight of how to set prices for the value you bring to them? In the case of auto detailing, better approach will be to let the customer know it’s an estimate until you actually see the vehicle.
Are you one of those die hards who will go to the ends of the earth for their customers but lose sight of how to set prices for the value you bring to them? It is well and nice that your skills and experience are in demand but without doing the math; things will add up and grind your business to a complete halt.
You need to remind yourself you are first and foremost, a business and then a service provider. Without the former, you cannot be as profitable as the latter. This is a major investment, not your normal job, it has equal chances of big rewards or big losses.
Start With The Micro View On To How To Set Prices
The manufacture of a product or the provision of a service involves overheads, materials and labor. These have to be appropriately apportioned and accounted for in your price. Than that price is marked up with a profit margin as “payment” to you, the owner, for the risks you undertake. Do not forget to factor in costs such as insurance, staff, and rent that will have to be incurred in view of the growth potential of the business.
In the auto detailing business, it can be difficult to know how to set prices because in some instances, if a customer makes an appointment over the phone, you cannot see the condition of his vehicle. Better approach will be to let them know it’s an estimate until you actually see the vehicle.
That way, it leaves you room to adapt your final quote according to its actual cleaning needs and the opportunity to up-sell your other add-on services, where applicable.
Merge In The Macro Picture
Your profit margin cannot be an “as you wish” percentage. It is dependent on several big picture scenarios such as; what is the demand in the marketplace, what your competitors charge, what your target customers are willing to pay and what are the services you are offering.
If you are new to the industry or to the area, you need to know and feel the pulse of the marketplace by doing market research on the demographics, in terms of population size, age, income, number of cars owned, and competition. Knowing the bigger picture gives you an edge in figuring out how to set prices that is acceptable to your prospects.
Narrowing down into the bigger picture, you also want to better understand your target customer market. What are their disposable incomes, what do they perceive as a valuable service?
Next level down is your service mix or bundle offerings. If you are part of a franchise system, these will have been set up already. As an independent service provider, past experience and market research may have guided you to offer services along the lines of a basic or premium package with the option to include add-ons for specifics such as; rim and wheel shine or swirl removal.
There will always be customers who view your prices as being too expensive and you will need to educate them on the value you are bringing to their automotive. As long as you set your prices within what are reasonable economic prices taking into account what the marketplace is charging and your audience perceives as value, you will be all set to go with your detailing business.
Enjoyed this post? Sign up for our newsletter to receive more valuable business and franchise info, ideas, and extras!