Let me show you how to raise your margins by 20% in 3 easy blogs – all without having your customers beat you up over pricing.
Ok, you do all the things right. You hired service people with a good aptitude and attitude, gave them some training through your distributor and manufacturers, promoted your company in your community, added some new truck signage and then, alas, you get called by a customer for your services to do a remodel, start weekly pool maintenance or repair something that has broken. When you receive your income statement however you find you are losing money in service.
This scenario is not unusual and has even prompted some influential and sizable companies in the pool business to minimize or even close their service departments. Some construction companies have even resorted to having a subcontractor friend who does service to “take over the account” once the pool is out of warranty.
What is really happening here is that the contractor is not charging enough to be profitable. Since so many contractors charge LESS than breakeven, it’s no surprise that they want out of the service business. It’s not unusual for a service company to incur a breakeven per hour cost of $75 – 85 per hour or higher*. Why, oh why, do so many service companies charge less than that for service? Do you?
“We can’t charge any more, our customers are already complaining about our rates”.
If your customers are complaining about a service rate that is BELOW your breakeven, it does make sense to want to shed that losing department and let someone else worry about the customer. Sound logic, but not the best strategy for your company in the long term.
Check Back for Part 2: The secret to charging enough in order to make a profit