Competitive Pricing

Competitive Pricing UKDA


Pricing can be tricky and sometimes worrisome aspect, especially when setting up a fledgling detailing business, and the answer is never straightforward. The balancing act of covering all your costs and still making a living at the end of it, battles against your desire to get; people through the door, pictures on your social media and some cash in the drawer. One thing we teach our students is;

Before you set your guide prices, DO NOT look at what others around you are charging.

 

– at least not before you’ve worked out your actual costs, including what you personally need to take home from an average week.

If you compare your prices and they are, say, £15-£20 more expensive than a guy down the road from you for a basic wash, your first instinct may be to drop your prices, possibly to slightly less than your competitor’s, in order to snag business and compete.

Stop Sign

This is a mistake.

 

This will likely attract three types of customers;

  1. Those who are just after the cheapest deal, regardless of quality.
  2. Those who only want to pay that price and no more, regardless of quality.
  3. Those who will always want far more than they’re willing to pay for, regardless of what you list for the service offered

Here’s why:

  • The first is a customer you will be unlikely to keep and will drop you when your competitor reacts to your prices.
  • The second will leave when you realise you have to charge a higher price to make enough to meet your costs.
  • The third will never be satisfied and always expect a 5 star service for 2 star pricing – lovely for them, but it makes you a busy fool.

 


Your costs reflect the job you expect to do and what you need financially in your personal circumstances to live and grow. If your prices are higher than others around you, but in the right ballpark nationally, either;

They could be using cheaper materials or providing a lower level of service for that price point. This is one you could copy, but you worked out your costs based on the business model and customer you wanted to attract, so why settle for less? Let them have their lower end customer base, whilst you chase your own who want a higher level of service or the use of premium products.

That said, you do also need to give the public what they want. Offering only £100 3 hour long mini valets at a shopping centre where people are only inside for 45 minutes isn’t going to work . If you find people only want a mini valet lasting 45 minutes, you can create a service that fits the bill for £50, and do two in 30 minutes less time.

It’s also possible that they are themselves not charging enough, either as a reaction to a previous competitor or through miscalculation – you charging less than this will only make you run low on capital sooner. Then it’s just down to whose business can survive on the lowest resources.

Finally, the competitor may have an advantage, such as lower rent, a fully paid off van, or an additional income, and is therefore able to charge less without making the losses you will. You don’t know everyone’s situations, so don’t assume it is the same as yours. – They might not even bother with insurance, which is not a corner you want to cut!

 


Price vs Value.

 

Something can be more expensive, but still provide better value – i.e. a ceramic coating is more expensive than a spray sealant, but the customer is then less likely to need it cleaned as often, so will save perhaps half the usual valeting costs over 3+ years. They also won’t need it polishing bi-annually to maintain gloss and remove swirls so that’s no machine work to pay for. Finally, they are less likely to have as much to do to it when it comes time to sell the vehicle so only a light valet is needed before photographing and sticking on Auto Trader, rather than a more expensive “showroom valet”.

Customer education is crucial to explain what they are getting for their money and any medium to long term benefits a higher level of service offers them and their bank account.

 


Be competitive, but not at any price.

 

None of this is to say don’t be competitive. Do your market research, compare the service you are providing to what your competitor is selling, and compare with similar companies in similar demographic areas nationally to see how the services and pricing match up. If you find you need to make an adjustment to the price, see what you can alter without cutting corners. Look at buying chemicals in greater bulk for greater long term savings, increasing your efficiency for longer jobs, or even adding bolt on services as upsells instead of including everything as customer may not need every service included.

Offer INTRODUCTORY prices, to get customers in so they can see what you can achieve for them for just a bit more, but remember, you are in business to make money, not customers. Mortgages aren’t paid for by the amount of hours you work or people you get through the door, but by your bank balance as a result.

 

 

You do your thing, let others worry about themselves.

Want more business building advice and guidance for a new detailing or valeting endeavour? check out our Professional Development Levels courses, which take you through not only the practical work skills, but the business skills to help make your venture successful, without the trial and error.

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