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9 Steps to Charging More

June 18, 2019
Here are nine steps to follow if you want to prosper by charging more.

Most contractors charge enough to survive, but not enough to thrive. Poor pricing is the biggest problem in the service trades because proper pricing makes other problems solvable. Here are nine steps to follow if you want to prosper by charging more.

1. Believe People Will Pay More

When confronting consumers and listening to your plumbers in the field, there is a tendency to fall prey to the belief that people want to spend as little as possible and are cheapskates. When people are seeking the lowest price, it is because no one has given them a reason to pay more. Without a justification for paying more, people always revert to the lowest price. They do not understand why they should pay more, so they ensure they are not overpaying.

In truth, people will pay more for things they want or perceive as superior. If people only pay the lowest price, explain how Starbucks gets away with its pricing. If you think that is a bad example because even an expensive cup of coffee is affordable, why are there so many luxury cars? The technology and quality built into today’s budget cars is pretty darn good and certainly good enough, but Mercedes, Lexus, BMW, and others are all thriving. From coffee to cars people willingly pay more than they have to. They will pay more for your company if you give them a reason.

2. Believe You Are Worth a Higher Price

You cannot charge more than you think you are worth. Thus, you need to believe you are worth what you should charge (i.e., not what you charge today, but what you should charge). Of course it is possible, even likely, that you will need to up your game.

Stop looking at the world through your plumbing glasses and look at it through consumer glasses. To a consumer, plumbers have a special set of skills, knowledge, and tools unavailable to the average person. This carries value. The average person cannot do what they do and cannot solve the problems they solve. This is why your company was called in the first place. The homeowner cannot solve his or her plumbing problem.

3. Charge a Flat Rate

The average person cannot conceive what it costs to put a trained professional in a fully stocked vehicle at a home. People do not understand what it costs to run a service business. The hourly rate required to operate a plumbing company seems outrageous to anyone who has never run a small business, which is just about everyone. Similarly, the hourly rate for a quick oil change company would seems outrageous if the quick oil change company charged time and materials, which is why they charge a flat rate. You should flat rate as well.

Even if you maintain the same prices, you should flat rate. Numerous empirical research studies have found that consumers prefer the certainty of a flat rate to the anxiety that comes with an open-ended time and materials approach. They believe that contractors charging a flat rate are more honest and offer better prices overall.

4. Budget For Problems

In contracting, things happen. Guys make mistakes. They have accidents. Customers misunderstand things and make unreasonable demands. Build a percent or two into your pricing for a reserve account (consider creating a separate business checking or savings account) for fixing mistakes. When there is a problem, the money is already set aside. Do not argue with the customer. Do not hesitate to make things right, even if you are not convinced you did anything wrong. Just fix the problem and fix it immediately. Charge the reserve account.

People place greater value on a company that stands by its work. It is incredibly frustrating for homeowners to have to argue with a plumbing company. Do not make them. Lots of plumbing companies guarantee satisfaction; be one of the companies that actually delivers.

5. Act Like a Premier Company

In your mind, how would a premier plumbing company act? How would such a company answer the phones? How would a premier company dispatch and keep people informed? How would a premier company market? How would this company talk about its customers? How would the company train people? How would the company be part of the local community?

Paint a picture. Get it clear in your mind. Start acting that way.

6. Look Like a Premier Company

Consumers cannot evaluate your service without consuming it. Thus, they look for tangible clues that imply what kind of service you operate. What can people observe? It is your plumbers, your vehicles, your building, your collateral literature, and/or your marketing?

Do your plumbers wear uniforms and look sharp? Are they well groomed? Do the guys shave daily? Are your trucks well wrapped? Are they kept clean? Does your shop look clean and have good signage? Do you have a good logo? Does your business cards, letterhead, and company marketing material reflect the good graphic design (and design consistency) of a premier company?

7. Offer Choices

Talk with executives of distributors or supply houses that sell to the plumbing channel and the retail channel. Ask what percent of water heater sales are standard five-year heaters when sold through the trade and what percent when sold through retailers. As a rule, 95% of the plumbing channel sales are standard five-year water heaters. This compares to somewhere between two thirds and 70% of retail water heater sales. How can a retailer out-upgrade a plumbing professional? It is simple. The retailers give choices. Even if they make no attempt to upsell, they give choices and a third of the population upgrades simply when given a choice. Imagine how many would upgrade if a plumbing professional gave them choices and explained the differences?

Offer choices. Offer choices in water heaters. Offer choices in brass. Offer choices in porcelain.

8. Offer Better Stuff

Plumbers offer better products than retailers, but do a poorer job communicating. Give your plumbers a pair of faucets that look alike, except one comes from a DIY retailer and the other is sold through the trade. Let people feel the difference between a professional faucet and a DIY faucet.

Go a further step and offer homeowners a good, better, and best quality in their choice of finishes and colors. Plumbing is décor. Consumers have a limited understanding of the options available to them. Help them understand and move from installer to design consultant.

9. Become a Specialist

In every field of endeavor, specialists command a premium. They can charge more because they know more and have fewer competitors who know as much. This applies in law, medicine, counseling, contracting, and other fields. Find ways you can specialize. Specialize in a geographic area. Specialize in a building type. Specialize in a plumbing technology. Specialize in kitchen or bathroom remodels. Specialize in the connected home. Specialize in living-in-place retrofits.

The Service Roundtable specializes in helping plumbing contractors improve their business and financial performance. Yet, because we use the Internet to deliver sales, marketing, and business management tools, we charge less than other groups and with our industry leading buying group, deliver more. Check us out at or call 877/262-3341.

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