One of the trickiest things for a business to nail down is pricing. Too low and you may be undervaluing your services, or even worse, make you not able to cover your expenses and lose money. Too high and you could price yourself out of the market. If you’ve been stressing over your pricing, we have outlined a strategy to make the process easier.
Creating anything without some sort of guide or reference point is a difficult task, that is especially true when it comes to pricing. Fortunately there are actually a ton of easy reference points and guidelines for detailer pricing, you just have to know where to look.
The first place to start when setting your pricing is a quick analysis of your service area. Simply put, different locations have different costs of living. A detailer that works in a suburb of Cleveland, OH will have have massively different pricing than a detail shop located in the middle of Los Angeles, CA. If you work in an expensive area of the world, feel free to stay on the side of higher prices, if the cost of living is lower in your location, you can keep your prices a little lower too.
The next thing you should research, is the pricing of other detail businesses in your area. Go to their websites to see both how much are they charging and how they are charging. Are they using a per-hour model? Or do they offer detail/wash packages that have a set price? Use this information to keep your pricing in check. It does not have to match exactly, and there are many reasons you would charge a bit less or a bit more, but try to stay within range of the pricing of your competitors.
Now that you’ve set your benchmark through research on the cost of living in your service area and the prices of your competitors, it’s time to start getting a little more personal. You need to look at the cost of doing business and how that factors into your pricing. Here are the 2 things you need to figure out to get a monthly cost of running your business
These are the costs that vary with how much work you do. Think of this as how much a it costs you to complete a detail. This is your materials, supplies, if you are a mobile detailer include gas used to to the job site, and – if you know it – include the cost of taking payment – credit card, check, and invoicing fees.
These are all the costs you incur regardless of how much work you do. If you have a shop this would include rent and utilities, if you are mobile you may include car payments. Also include any monthly fees you pay for software and anything else directly related to running your business.
Ok, here comes a little math. Take your average number of jobs per month and divide it by your fixed costs, add that number to your variable costs. That is your average cost per job. This number will obviously fluctuate based on how many jobs you do per month so if you have busy and slow seasons be sure to take that in account. When you have your costs per job you can use it see how much money you need to charge on average to make sure each of your jobs are profitable.
You’ve done your research, gathered all the facts, and crunched your numbers. So far, we have been 100% objective in creating a guideline for setting your pricing. Now it’s time to get a little subjective, it’s time to start feeling things.
Well… ok, it’s not that dramatic. What we’re really doing now is looking closely at the quality of your work. Do you offer a quality of work that is heads and shoulders above the competition? Do you feel like an hour of your time is truly worth more than what other detailers offer? If that is the case, feel free to bump your prices up a bit more to reflect that. Just don’t stray too far from the pricing baseline you established above.
Is the demand for your services rising considerably? Are you booked solid almost every month? Having trouble fitting all of your jobs into your schedule? If so, it’s good idea to consider an increase in your prices to match your increase in demand.
Prices are never set in stone, and it’s a good idea to re-examine your pricing every year or two using the guide above. There are also a couple of other common questions from detailers when it comes pricing.
If you charge purely by the hour, this is less of a worry. The job will take as long it needs and you will bill accordingly. However, if you have a detail package pricing model, it is a common and smart practice to adjust the price of each package per vehicle. The image below is a good demonstration of this, it’s the pricing model for Gallagher Auto Spa here in Portland.
If you are raising prices at your business, it is best to take a slow or tiered approach with your regular customers. First off, do not change any quotes that you have already sent out or change the pricing of any job you have scheduled. Let your regulars know that you are looking to increase your prices and offer them a gradual increase to your new pricing.
Sometimes a job is going to take longer than usual. Perhaps a customer’s car is crazy filthy, maybe they ask you about a bunch of extra services that are not really standard, whatever it is, some jobs are just going to require you to go beyond your normal expectations. It’s for these times, that you should always have something like an overtime hourly rate in your back pocket. Something that you can add on to the cost of a job when you are forced to spend extra time – just be sure you have an easy way to add it to your invoice.
Using the guidelines above you should be able to start setting proper pricing and turn a profit without turning off your market. Use your location and your competitors as a baseline and make sure that are you charging above your costs. And, don’t be afraid to charge a premium for premium quality service.