Implementing a flat rate pricing program into your HVACR business won’t always be a smooth process. You need to consider that if your current method of operation is time and materials, then implmenting a flat rate system is something new. And new is always uncomfortable. That’s just part of the human condition. We are always uncomfortable with change.
As I mentioned in part one of this series, one of the situations you’ll have to deal with is the technician who performs the repair. (If this is you and only you because you operate a one-person outfit, then, of course, you’re the technician.) Regardless of your situation, the bottom line challenge is every person in your organization being capable of understanding the value of the service you provide. If the way you set your price for service is to look around and find out who in your area is the highest price, and then who in your area is the lowest price, then setting your rate somewhere in the middle, then you have to face a fact…. which is that your rates are not based on your cost of doing business, but instead what your guess is as to the going rate in your service area. And if your service rates are based on the unscientific approach I mentioned, there’s a very good chance that you’re not charging enough for what you do. All of which means that your first challenge is realizing that your rates are likely to go up.
The best way I can explain the right approach to that situation is this: Build a bridge and get over it.
You and everyone in your organization needs to understand that what you should be providing to your customers is the best value for their money spent. And that doesn’t mean that it will be the lowest price. The bottom line on this is something that I’ve said many times before, which is that we need to understand that there is a difference between a customer and a shopper. A shopper shops for price. A customer shops for value. And your mission in operating a successful service business is to concentrate on providing the best possible service you can provide for your customers. And, if somebody calls, and they are first and foremost, and all the way through their inquiries about having their equipment repaired, concentrating on price, then they’re not a potential customer. They’re a shopper. Does this mean that every inquiry you’ll field will result in a scheduled service call? No, likely not, but if you’re working on nothing but the lowest price possible and a razor thin margin that can go South on you with the slightest complication, where’s the sense in taking that job on?
Once you’ve built your bridge and committed to excellence based on value for your customer, and not just the price itself, the next issue to consider is a specific plan of implementing a flat rate labor pricing system. One element of this is to prepare, and stick by no matter what, a given script that will be used when somebody calls and asks the magic question….”How much…..?”
Your script answer to any price question is this: “Our service call and diagnostic fee is $______. Once the technician has determined the problem with your equipment, he (or she) will be able to tell you what your total repair cost will be.”
Of course, there will be times that a customer won’t “get it” when you explain this simple and direct system of doing business (we, as human beings, always want to make things more complicated than they need to be), and when this happens, be prepared to repeat what you said word for word, prefaced by a “Yes Maam” or “Yes Sir”, “….what I’m explaining to you is that we use a flat rate pricing system for specific repairs, and that…..our service call and diagnostic fee is…..”.
Once the customer does have a complete understanding of what you’ve explained to them, they either will or won’t schedule a service call. The odds of them following through with scheduling with you because you are approaching the service they need in a professional manner are in your favor. Again, is there any guarantee that you’ll get every person who calls will schedule their repair with you. No, there’s no guarantee, but think about it this way. Those who aren’t willing to have you come out based on what you tell them on the phone may not be someone you want to be performing service for in the first place.
Once the service call is scheduled, the next step in the process is up to the technician who will be making the diagnosis and accomplishing the repair, while explaining and advising the customer on the service they need.
Until next week.
Learn from yesterday…..Live for today….Look forward to tomorrow.