Whether you own Amazon, Facebook, or a local business in your community, one of the biggest challenges as a business owner is not knowing when and how to price products or services.
You might have a functioning plumbing business, but is it your community's best rate plumbing business? If you want to make it the best, stay tuned and find out how you can get your plumbing pricing right the first time and maximize your profit funnels.
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6 Factors That Guarantee Best Rate Plumbing
Here is a list of all of the different factors that are going to discuss in this article regarding Best Rate Plumbing.
- Gathering customer feedback
- A financial advisor's advice
- The suitable pricing model for your business
- Profit goals
- Your break-even point
- Insight from your target market
Let's discuss these factors in detail and find out how they can benefit in making your company the best rate plumbing business.
1. Gathering customer feedback
One of the most critical factors on the list is gathering customer feedback on your products and services.
You can gather the aforementioned customer feedback through the following variables:
- Call or ask for input from a specific client that you gave your services (if the customer had a positive experience when you were working with him)
- You can conduct different social media polls regarding plumbing services or some other products that you connect to, so when they interact with those polls, you will have a lot of information about how your potential customers feel about a particular product or service in general
- Whenever you work for a client, you should encourage reviews, but always keep in mind that you should never incentivize these reviews; otherwise, your customers would never respect you or treat you as an honest business
- You can also try text surveys and follow-up texts using a text automation software
- You can also try email surveys and follow-up emails using an email automation software
You can also try out a strategy to raise your plumbing service pricing for some of your unprofitable customers and send them a survey afterward. This survey helps them express their feelings regarding this price surge.
If they are okay with this pricing model, use it for all of the customers, and if they don't like it, change the pricing and test it again till you get it right.
2. A financial advisor's advice
Whenever you think that you have your plumbing pricing model finalized and it is the best it can be, consult with a financial advisor. They will tell you about the factors you need to modify to make it more profitable for you and the overall business.
Remember that your entire business runs on finance, and your business will never flourish if the financing aspect is not perfect.
3. The right pricing model for your business
Every other factor on the list seems connected to your business pricing model, so let's talk about it by breaking it down into 3 major categories and their associated pros and cons.
Flat Rate Pricing
Moving on with the best rate plumbing analogy, the pricing model is when you combine the cost of parts used in your service and your technician's hourly rate. This cost of parts is needed to bill the client for the trip fees and the service calls you made.
One of the best things about flat rate pricing is that many customers prefer this type of pricing as you present it on-site, and there are no hidden charges resulting in mistrust.
You can always use software to track those numbers if you have trouble finding the perfect flat-rate pricing for your product and services.
Some of the benefits related to flat rate pricing are:
- As there are no hidden costs and no extra fees that can spring up on the customers without any notice, they are more comfortable doing business with you and will regard you as an honest business or service-provider
- The best thing about flat rate pricing is that you don't need to create a custom price quote for every single client that hires you, you have to refer them to your flat rate pricing guide, and they can easily choose the type of service that they want
Some of the bad things about this pricing plan are:
- You always need to have a flat rate book with you that is updated regularly because you need to know the exact cost of materials per job for a flat rate pricing model. Otherwise, your business can get into trouble
- The other unpleasant thing about this pricing model is that there is only a single plumber, and they will have a set amount of time to finish the whole gig rather than basing the job fees on each of the plumber's time for the entire project
One thing you should understand is that since flat rate pricing should be standardized and all of the technicians involved in providing the service are required to complete their jobs within a specified timeframe – and that too, by using a specific set of equipment and tools, you can't charge the client for a technician to technician aspect.
On the contrary, changes have to be made from service to service point of view.
Another thing to keep in mind is that you should consider the wide variety of equipment costs you face as you set up your flat rate pricing book or tool, and that is how things are done in that pricing model.
Also, the more precise your flat rate pricing is, the easier it will be to reach your profit goals.
Time & Materials Pricing
The time and materials pricing model is used when you bill a client for the entirety of the technician's time when they were working, plus any and every additional cost that might have been incurred from the service or project after it is fully completed.
However, you will need to work extra hard to sell this pricing model to all customers doing business with you for the first time.
Since this pricing model effectively helps to ensure that your jobs are profitable, some of the businesses in the plumbing world choose to bill their clients for services or projects using time and materials pricing.
It means that the client will only pay for the material used in the development of the project and the time it took the technician to finish the job.
Some of the benefits related to time and materials pricing are:
- Using this pricing model, you can take more control over the entire revenue stream by setting an individual profit margin for every project. Since you can easily calculate the cost of the time and materials after the job is done, you don't need to know about every single estimate related to time and materials, beforehand
Some of the bad things that are related to this pricing plan are:
- Most of the customers in every market want to know about the cost of an entire project upfront, and since they can't say that price in a time and materials pricing mode, it can be a hard sell
- One of the worst things about this pricing model is that it is very time-consuming as you have to add every plumber's time and materials estimates for every project to create a new unique estimate
Service Calls and Trip Fees
We have all witnessed plumbing businesses around the world charge a minimum two-hour fixed service fee. This service fee is also attached to a flat trip fee that the client has to pay.
However, if the whole service or job exceeds those fixed two hours, the client can switch to flat rate pricing and not pay for anything extra.
In this scenario, the plumbing business would only charge for the labor of the handyman's tasks. Depending on the project, the business can offer a discount to the client, or in some cases, they can waive the entire two-hour service free altogether.
4. Profit goals
The next item on the list is setting the right profit goals for your business. At this point, you have determined your project costs, and it's time to set the profit goals you want to embed in your plumbing pricing.
Step 1 of this activity is calculating your net Income. This net Income includes the following:
Net Income = Total Revenue – Material Costs – Labor Costs – Overhead Costs
Once you have calculated your net Income using this formula, you can go ahead and find your profit margin using this formula:
Profit Margin = Net Income / Total Revenue
Step 2 of this activity incorporates your profit margin goals in the entire price of the plumbing service you provided to the client.
When trying something new for your business, you should try a few different things to choose the one that sticks and benefits your business.
Step 3 of this activity is comparing all of the plumbing pricing that you created with the entire market competition
Comparing your pricing with your competitors and updating it carefully is good if you want to stay reasonable in the market and earn a decent client base.
5. Your break-even point
Break-even is essential in making your business a best rate plumbing company. If you calculate your break-even point, you will know the bare minimum amount to charge a client when work's about to be executed.
To calculate your break-even point, you need to add all of your monthly costs:
- Software and IT overall
- Vehicle insurance
- Property rental costs
- Vehicle/equipment maintenance
- Vehicle payments
- Business Insurance
- Office staff/leadership pay
When you have added your monthly costs, you need to calculate all of the estimated labor costs you will face regarding the jobs your employees have to perform in the month.
You calculate these estimated labor costs by multiplying three different numbers.
- Number of techs on the team
- Hours worked
- Average hourly pay
Lastly, you have to calculate the total monthly required by your company, and this is how you calculate it.
You must add the total monthly overhead expenses to the estimated labor costs you will face. This will give you the total monthly revenue that your company requires.
6. Insight from your target market
One of the essential steps to becoming a best rate plumbing business is knowing your target audience well, and to do that, you have to find out different things like:
- What is the age bracket of your most loyal customers?
- What is their relationship status? Do they live alone, or do they live with a partner at home?
- What is their level of education?
- What is their total household income?
- How many children do they have?
- What are some of the challenges they face daily, and what pain points would they like to address?
- What do they do for a living and have ample spare time daily?
These are some questions you can ask your local customers or community members. If they respond to these questions in a positive manner, you can go ahead and ask some specific questions :
- What features of your plumbing business that they like the most?
- What do you care about most when choosing between many plumbing companies in your community?
- Why did you choose us over all our community plumbing companies?
When they answer these questions, you will have a much deeper insight into the mind of your customers and their thinking patterns.
Over To You...
This was our guide regarding the best rate plumbing business. If you have a query or a helpful suggestion, feel free to email us, and we will get back to you ASAP.