Increasing Prices

[debbiem]

I just wondered if I could get a few views on increasing our prices. We install and maintain industrial heating appliances.

Installations and regular service visits are quoted at a fixed price per job. For callouts we charge a callout charge at a fixed sum depending on where the customer is (to cover the time our engineers spend travelling) and then charge per hour for time spent on site.

We've had the same hourly rate since we started trading in 2006, but our costs have increased since then mostly because of the increase in fuel prices, and I obviously want to be able to give small wage increases to our engineers on an annual basis.

I don't really know how our hourly rate compares to other companies. Does anyone have any knowledge of what a similar company has charged you, and what area of the country are you in?

I'm not sure when is a good time to introduce a price increase? We are normally very busy from August to March and sometimes turn new business away during these periods. From April to September is generally quieter and we rely on subcontract pipe work installations to tick over.

Should I increase prices at the beginning of the heating season when customers often need us urgently and don't have time to shop around, or at the end of the heating season when they are less likely to be interested in heating issues and may have forgotten by the end of the summer.

I feel confident to say that 99% of our customers are happy with our service, but many companies are feeling the pinch and i'm worried about prompting them to check out our competitors.

Also, what is a reasonable amount of price increase? How many pounds per hour would you think was reasonable if you were my customer?

Or would you not consider raising prices at all in the current economic climate?

Thanks

Debbie

 

[directmarketingadvice]

I don't really know how our hourly rate compares to other companies.

One rule of thumb for service businesses is, if no-one says it's too much, it's too little.

Hope this helps,

Steve

 

[Adam Loveday]

I'd echo what Steve is saying Debbie. I recently attended a Business Coaching seminar and an annual price increase was something that they addressed and asserted should be part of your strategy, at least enough to offset inflation/cost rises. Their advice was that unless 10% of your customers are telling you that you are expensive then you are too cheap!!
Rgds
Adam

 

[Ræcan]

Make an increase when your costs rise immediately. If no one is complaining you are not priced highly enough, you could offer future contract prices for parts to your customers (assuming standard parts for standard services), you have at least given customers a chance to limit future price increases and you get the cash flow up front. Fuel prices increase for everyone so you should pass them on as soon as you can.

Good luck!!

 

[BobbyBoy]

Hi debbie

Why not be a 'mystery shopper' and call your local competitors and check their prices after all, its these people who you are in direct competition with.

When was your last price increase?

If it was a while ago, I can't imagine that many customers will complain if you have a price increase now, especially with the increase in costs that many businesses have sustained over recent months/years.

When notifying your customers about your price increase you should justify the increase in terms that your customer will understand.

We just had a price increase on our security alarm service contract and didnt think twice about shopping around for another provider - why would I risk getting a cowboy when I already have a reliable supplier.

Hope this helps

Bobby

 

[Ameliepoole]

if you can offer an increased level of service
or able to differentiate your quality against the competitor
then yes you should look into it

 

[I Love Spreadsheets]

One rule of thumb for service businesses is, if no-one says it's too much, it's too little.

Hope this helps,

Steve

This worked well for me when I set my prices or increase my prices

A price increase can help increase business. I emailed all my clients that I would be putting my prices up in a months time and I was flooded with enquiries the next day