“How much do you charge your clients for installations and service calls?
We are reviewing the rates ($95/hr) we charge our clients
and would like your feedback.”
This is a great question that was asked by one of my LinkedIn Security Marketing Guru group members about pricing. The posted question really grew a set of legs and took off. I was amazed at some of the answers that were in this thread. I think the topic is well worth studying and paying attention to because everybody that I run into has some sort of pricing issue. I would pay close attention to what my friend, Jordan Frankel, said about pricing and also what I had to say about creating a Goldilocks pricing structure.
Below is the question how it appears in the thread. This question was posted by Virgil Reed, Owner of Reed Security, out of Saskatchewan, Canada.
By the way, if you’re not a member of my LinkedIn group, Security Marketing Guru, you should be. Get on board today!
Virgil Reed • How much do you charge your clients for installations and service calls? We are reviewing the rates ($95/hr) we charge our clients and would like your feedback.
Bob Maunsell • Virgil, You’re thinking about your pricing strategy the wrong way. Never mind what the industry charges, you should become the leader in your industry and command a higher price.
Security is a complicated field now. It involves security, IT, wireless networks, mesh networks, locksmithing, and so on.
You should be able to offer your services for $125-$145 per hour (or even more) depending on the perceived value of your security services.
If you are constantly communicating exceptional value, knowledge, expertise and phenomenal services to your client base (i.e. through educational-based marketing efforts, such as, client newsletters, emails, direct mailings, webinars, client appreciation events, etc.) then you will be considered the expert in your industry and the go-to-guy for your services.
Last time I checked, experts in the field (any field) weren’t cheap!
Gary Hall • I 100% agree with Bob. The old cliché, you get what you pay for really holds true in today’s market. It seems like more and more clients are respecting higher labor charges as they have heard horror stories from friends that “got a deal” from a guy who could only work at night or weekends. This especially holds true when a technician shows up in a clean, well maintained service vehicle. We have recently added back in a “fuel surcharge” which was popular 5 years ago when gas spiked. Once again, clients know rising fuel costs have effected their lives across the board.
Bob Maunsell • @Gary, You’re absolutely right! I like how you used the word “respect.” If you show up on time in your sharp, clean uniform and sparkling van, are knowledgeable, polite and courteous, and do a fantastic job, clients know you’re a step above the rest and won’t balk at your premium pricing because they respect you and know there is value in your services.
Jordan Frankel • OK I thought I would weigh in on this subject. So just today my alarm company visited by house to change to back-up batteries and reprogram some remote panic buttons. The tech did not know me personaly and charged me the normal retail cost. The final cost for the visit including installation of two back up batteries and trouble shooting the panic remotes was $104.00.
Call me crazy- however this seems silly cheap . I was expecting a min of 160.00 dollars. How do you guys make money? The two batteries must cost a min of $ 40.00.
Bob Maunsell • @ Jordan, Many people are afraid of charging higher prices. They’re afraid of spending big money, and they’re also afraid of charging more money. I have NEVER seen someone who’s too cheap to spend their own money, ever be able to successfully charge others more money. Call it whatever you want, that’s just the way it goes. Go play that Pink Floyd song “Money”!
Jordan Frankel • Agreed :)
Matt Terry • It really depends on your current customer base. Are you going after homeowners who look for installers on Craigslist in a low-income urban region or after commercial accounts in high-end shopping districts? You have to make sure price is a valid objection. If you are slow and you are sure someone can’t pay more than $65 an hour, I don’t see a problem doing it for that. But, yeah, what Bob said. Never be afraid to charge what you are worth. Don’t be afraid to turn down a job either if they don’t want to pay it.
Jordan Frankel • My firm obtains many projects just by the sheer fact we are were willing to walk away unless we are compensated fairly. And to be honest it’s my firm that decides what’s fair- we don’t allow the marketplace to determine our worth.
Bob Maunsell • Profits are Better Than Wages by Jim Rohn
My mentor, when I was 25 years old, dropped a phrase on me that changed my life forever when he said, “profits are better than wages. Wages will make you a living, profits can make you a fortune.” You know it is a bit difficult to get rich on wages, but anybody can get rich on profits. Profits change your whole attitude, even if you start part-time. Whether it’s part-time on your entrepreneurial business, or service business.
It can be a landscape business in the summer or hanging Christmas lights in the winter. It can be training, consulting or tutoring. It can be your hobby such as painting, writing, crafts, woodworking, computers or cooking. But once you start investing even part time effort into your own business, you will find how much more exciting it is to get up in the morning and go to work on your fortune, even if you’re only spending a few hours a week doing it.
How empowering it is to be able to go to work on your fortune every day rather than going to work to pay the rent. Now – it is noble to go to work to pay the rent, but if you could also parcel out part of your time – go to work to make your fortune. Your whole attitude changes; your spirit changes. It is in your voice. It is in your face. It is in your gestures. And then you can say, “I am now working full-time on my job and part-time on my fortune because I found a way to make profits.” Wow!
Let the adventure begin…
To Your Success,Jim Rohn
Chris Masse • I always use the example of if you buy something from the dollar store for a dollar then go to a full price retailer and buy the same item for five dollars what is the perceived value of the item at the dollar store? how are two stores able to sell the same product for different prices? The answer is easy dollar store/warehouse club/outlet center are perceived to have lower quality than the full price stores. Wouldn’t you like to make 400% more than your competitor?
Bob Maunsell • GOLDILOCKS PRICING
@Adrain, what you should be doing is offering tiered pricing strategies that show value at each level. Hot, medium, cold…which one is just right for your client? Obviously, the higher the pricing tier, the more benefits the client will receive. With a Goldilocks pricing strategy, the client can decide what level he/she feels most comfortable with – this way you don’t have to try to judge where you think they are on the scale. When you think a client can only afford so much, you end up, most times, leaving money on the table.
Also, many clients will go out and get three competitive quotes. When you give them three tiered pricing quotes, you are allowing the client to choose between You, You and You. In most cases, the client will feel like they got the three quotes and will not shop around…especially if they feel they’ve got a highly competent and knowledgeable security expert spoon feeding them advice and valued pricing.
Shamuel Kohen CSP • Whats your ABC ? activity based cost? look at what each individual activity is costing and add your cut to the mix. simple accounting should help you with this question.
If you don’t know if your shorting yourself or if you want to be competitive, I would advise you to do ABC. In this ABC context look at your ROI, return on your ABC investment.
When I was doing security management with a logistics firm in their supply chain management department. The Price i would charge heavily depended in my activity base. then I figured ion all the costs and I came up with a price based on those figures versus pulling a price from my armpit.
When we had contractor presenting us a price, first thing i asked is, where did you come up with that figure…the eyes crossed and we moved on to the next potential contractor. think about it..don’t short yourself by pulling prices from thin air.. do some accounting and you’ll save yourself a headache.
Machado Pedro • I Agree with all
Bob Maunsell • @Shamuel, Good stuff! In the U.S. ABC = Always Be Closing. I like your ABC = Activity Based Cost!
Todd Rockoff • Hi Bob, I always wondered about “Always Be Closing” … how much time does that allow for learning? How about “always be conscious of your objectives, do things to advance your objectives, try not to dissipate energy not advancing your objectives.” Sometimes the objective is to make a sale, other times to establish a life-long business relationship, other times to change yourself or the world in some way.
I really like “profits are better than wages.” A friend of mine once said the same thing a different way: “It’s called capitalism rather than labourism for a reason.”
Bob Maunsell • @Todd – hello to Down Under! All that you listed and more comes into play under “Always Be Closing.” You have to have your objectives on the top of your psyche and constantly and consistently be moving forward to obtain them. Learning – keeping abreast of the new products/services in the field and discovering profitable marketing strategies and techniques, building new relationships and nurturing existing relationships, educating your prospects and clients and providing phenomenal services and follow up, and, yes, improving yourself and making the world a better place in some way, all are key ingredients to having a successful and ethical security business. You also need killer marketing systems in place to get your business to this level and the bottom line is, you need to “Always be Closing” to have the profits/money in place that allows you to do all the rest.
Todd, if you like that quote from Jim Rohn, “Profits are better than wages,” then you’ll like this one from Jim (it really speaks to me and my members.) “A formal educations gets you a job, self education makes you a fortune.”
P.S. I really like the capitalism rather than labourism quote.
George Hindy ★★★★★ • When I was running my own business I used two pricing methods;
1. Cost plus Markup- This was the baseline price for my services. I would calculate all my business overheads to work out the cost at an hourly rate then add 40% markup. This method was my “Bread and Butter” pricing method.
2. The “going rate”- Even though I had little overhead, I still charged the same going rate as larger businesses for my services. This was more profitable for me as I could service clients that were “comfortable” paying these prices. These customers were my business’ “Cherry on Top” delivering me 300% ROI.
John M. Feeney • Nice thread…..comparing installation / service rates. Regardless what you charge, someone is always willing to be a dollar cheaper. This challenges every Sales person, to create the value in the company / people / service, not the product. When I first proposed raising our hourly rate, the first reaction was nobody would pay. Then I showed them a survey our own customers answered. #1 factor in choosing us PRICE. Which to some was great. The problem is unless the Price factor is followed by the volume you gain nothing. Your leaving money on table.
Experience has shown time an time again, the key to this business model is Service. Anyone (I mean anyone) can sell CCTV. We your able to define your companies position and what makes you different, clients are willing to pay. When their NOT, it pretty much shows it didn’t accomplish that task. Or as I like to say, your not my client.
Now Go Smoke Your Competition! – Bob Maunsell
Former Sgt U.S. Air Force
Have an E.S.P style day, Easy, Successful, Profitable.
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