Absolute Certainy

How to give your customers exactly what they wants

Price at The Start

Many owners of service businesses believe they sell time and so they charge by the hour. When the job is finished, the hours recorded on a timesheet are added up, multiplied by an hourly charge rate and the client billed accordingly.   It is a simple method and has been used by many successful service businesses.  However:

  • Working in this way places all the risk on the client.  They don’t know how big the bill is going to be until it arrives.
  • There is no incentive for you to be efficient.  The service business gets paid more if the job takes longer. 

If you charge this way you may think your clients are comfortable with it, but ask a few questions and you will find most don’t like it.  Your clients would much prefer to know the price before you start the work.

Where jobs are of a standard size, upfront pricing is straightforward. Where jobs are variable, you need systems to determine the scope and value of the work being provided.  But more importantly you will need to learn to use your judgement.  The best way to do it is to commit to upfront pricing and then get out and learn from experience.

Pricing at the start of the work also gives you an incentive to improve your efficiency.  It aligns your interests with your client’s interests, and that’s got to be good for business.

 

Next principle - Put a Stop to "Busyness" >>

<< Previous principle - Deliver What Your Clients Want