When I started my appliance repair business, I decided to undercut my competition’s rates by 10% to convert sales, book lots of calls, and build a loyal customer base.
To be honest, I also charged lower rates so I could feel comfortable during service calls considering my inexperience. Basically, I wanted to be cheap enough that nobody would complain if it took a little longer to fix something.
And this strategy has really worked.
The phone rings constantly, I convert over 90% of my calls, I have satisfied customers who give me repeat business, and nobody complains about my turnaround time.
If it ain’t broke don’t fix it, right?
Wrong.
I just raised my labor rate 30% to top market, and I’ll tell you why.
First, the phone rings constantly. It rings so much, I can’t run all the service calls myself. I have hired other technicians in the past, had as many as three other techs working for me at one time, but I’ve discovered I’m not really looking to run a huge operation. That’s just a personal choice. So when the phone rings, I have no alternative but to turn away business.
I figure, one smart way to turn away business is to charge more money, right?
Best decision I’ve made since I chose appliance repair in the first place!
First, I now make a lot more per call while running the same number of calls. Basically, I just gave myself a big raise.
Second, I realize if I’m converting over 90% of my calls, that’s actually a sign I’m charging too little. By charging more money, some of the calls do shop around and I get a few more cancellations – mostly the penny pinchers – but I have to admit I don’t miss those guys one bit.
Third, my repeat business does not really come from my rates. I provide great service, and it turns out the tons of positive feedback I get is about my service, NOT my rates. All things being equal, even competitively priced, my regular customers still choose me.
And by the way, I am an experienced technician now so I don’t feel like I have to cover my inexperience with lower rates anymore, and I’m pretty proud of that.
Hey, maybe I should have done this sooner…