So, you’ve decided to open your own automotive reconditioning business. You’ve got your equipment and training and now you’re ready to take on the world-”and make a big profit in doing so.
The next step is to start building a customer base with a systematic marketing campaign. Once potential customers begin calling, it’s necessary to be able to sell your service, provide excellent results for those who decide to work with you, and then collect a fair price for your work
What’s a Fair Price?
Let me start with a few words about the concept of pricing. We’ve often heard the term fair market price. In my opinion, a fair price must be fair not only to the customer, but also to the operator.
It’s certainly not fair to charge the customer for crummy work or service that wasn’t performed. At the same time, it’s not fair for you to break your back providing excellent service, only to take home the same wages that you would be paid at the local quickie-mart.
Operators are often afraid of losing customers. We all have a fear of the word no coming from our customers’ mouths.
It’s important to remember that you don’t have to have every vehicle owner in town as a customer-”only those who are willing to pay a fair price for excellent service. There are plenty of vehicles to work on without compromising your price or service.
Pricing and salesmanship are critical components of a successful business. Salesmanship is the methodology you use to justify your price. In fact, the best sales conversations end up convincing the customer that price is not even important.
Unfortunately, there are those of us in this industry [and many others] who are experts at delivering the service, but not all that great at selling the service or making a lot of money doing it.
I believe that pricing and salesmanship are tied together intimately. You need to be able to tell the customer why he or she should patronize your business in a way that deflects any concerns about pricing.
One of the best ways I’ve found to do this is to focus your conversation with the customer on the benefits, advantages, and elements of your service. Talk about how much the customer will get instead of how much it will cost.
If you choose a marketing strategy that includes a lot of advertising [e.g. Yellow Pages, mailers, print media, etc.], you will answer many phone calls that begin with the question, “How much do you charge?”
There are three ways to handle this question:
- Give out your price right away;
- Provide information, then a price;
- Or, ask a question.
Typically, the customer that shops the Yellow Pages for service is looking for the lowest price. So, if you decide to give out the price right away, you better be the lowest in town, or the customer will probably hang up. I think you can see that this is not a good answer to the question.
Instead, I recommend informing the customer about your service. For example, you might say something like, “Well, we here at Joe’s Detailing pride ourselves in providing our customers with the best possible service. We will do everything possible to help your car look as new as possible. We offer a service excellence guarantee-”if you see something you don’t like, let us know and we’ll take care of it. And for all that, our price starts at a low $XX.”
With this approach, you first tell the customer what he or she is getting for the price.
The third way of responding to the question “How much?” is with a question. Something like, “Well, what kind of service were you looking for?” or “Are you looking for the lowest price in town or the best service?”
Almost everyone will answer such questions with something like, “Well, I want the best, of course.” You have thus cleverly maneuvered the conversation so that the customer has committed him or herself to a higher level of service, which logically should cost more.
Then it’s easier for you to explain the benefits and advantages of your service, after which you can casually slip in the price.
Perhaps you’ve already been in business for a while, but you don’t feel like you are making enough money. Of course, there are several ways to make more money, such as working more, duplication through employees, and increasing efficiency.
Yet, sometimes it’s as simple as raising your prices.
You have to remember that your customers are receiving a service that involves expertise, time, professional equipment and chemicals, and a certain amount of liability. Most customers don’t have the time, knowledge, or equipment necessary to do what we can do.
There should be a fair price attached to your service. Look at other service industries like plumbing, landscaping, electrical and appliance repair that price out at $60-$250 per hour!
You can also look for signs that it is time to raise prices. They include:
- Your schedule is completely full for two or more weeks in advance, and your customers are willing to wait for you instead of finding someone else;
- You have to say no, or pass on some of your work to other technicians because you have too much to do;
- You’ve got plenty of customers and plenty of work, but you’re having trouble paying the bills;
- Your customers suggest that you are not charging enough;
- You consistently receive large tips;
- Other technicians in your area charge more than you for work that’s not as good.
So, you’ve decided to raise your prices. Yes, you will lose some of your existing customers. But that simply makes room for new clients who are willing to pay the higher prices.
Another tactic is to revamp your pricing structure and expose only new customers to your new pricing. Returning customers pay the old prices-”a concept sometimes referred to as grandfathering.
What About the Competition?
Ignore the under-cutters-”they are not your true competition because they cater to customers who are looking for the lowest price. Your true competitors are those technicians that do great work and charge a good price for it.
I have long said that competition is what you make it. Yes, to some extent, it’s all in your head. You can focus on being afraid of what the others are doing, or you can focus on providing service excellence to your customers and let them send more and more referrals your way.
Making enough money in the automotive reconditioning industry begins with a commitment to providing nothing but the best service. The next commitment is to take excellent care of customers.
The next commitment is to you-”commit to offering excellent service for a price that is fair to the customer and to you!
Then, make sure your new customers understand what they are getting for their money.