Setting a minimum charge

By Rob Anspach

November 30, 2011

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Hardly a day goes by that some company isn’t violating this commandment. I’m not talking about any of the 10 Commandments. I’m talking about this one: “Thall shall not short-change thyself”

I’ll start with a story and end with a sure-fire cure that will have you making more money. When I say sure-fire, I mean you need to follow the advice, not just read the article.

I recently called three plumbers to come out and fix a leaky seal in my tub faucet. It was just a small seal and about 35 minutes of labor. Sure, I probably could have repaired it myself, if I had the right tools and the patience.

The first company I called had a $275 minimum just to come out. I thought I''ll pass, I mean — really — it''s just a small seal and hardly any labor to justify spending that much money. The second plumber said two weeks. That''s code for I''m never coming out. Now the very last plumber I called was the one who came out and stopped my faucet from leaking.

He didn''t waste any time, brought in some weird looking tool and a rubber seal and in 15 minutes was done. His bill came to just $50.

I asked him why so low when his competitor wanted almost six times as much. He said he was just happy for work and being fair to customers was his way of insuring future work.

Well, I''m glad he saved me money, but I doubt he will be in business next year.

Here''s why, if you haven''t guess it.

The first company was dead right. They know their cost of doing business and aren''t afraid to tell people what it is. They know if people want to use their service they have to pay the minimum. Those that don’t probably aren''t a good fit for them anyway.

At $275, the company knows that their technician is being paid, their costs are being covered and there''s enough profit to insure future success.

This is the “Thall shall not short-change thyself” part… if you hadn’t guessed. Here’s why… $50, I''m sure didn''t even cover his gas, insurance, tool cost, and all the overhead fees associated with running a business.

Do you have a minimum? Most companies don''t, and some just wing it. Most minimum charges are way too low.

If a $275 minimum sounds high, let me share with you another example.

A friend of mine is a search engine optimizing wizard; he just raised the monthly minimum he charges for his services from $500 a month to $2,000. A big jump! He figures he only needs 10 clients a month to make $240,000 a year; less headaches, and better customer interaction. A more personalized service.

Let customers know up front what your minimum service fee is and explain to them what they get in return; if they balk at it, let them go. In most cases, they aren''t worth the effort to keep them.

Your business needs to make money, plain and simple. If the costs involved in servicing a client (fuel, labor, truck, insurance, advertising, uniforms, chemicals, supplies, etc) exceed what you are charging, then you are losing money. That truckmount costs money. Replacing that truckmount in five years costs money.

How many times have you pulled into a client’s driveway with your $45,000 set-up and only charged the client $50? Or even $100? You have more equipment than that high-end plumber, and he’s charging more than you.

By establishing a minimum service fee, you are telling your clients that your time has value and you expect to be paid for that value.

You might not be able to charge a $2,000 minimum, but I''m sure you could get closer to the $275 mark. And frankly, wouldn''t that help a bit getting rid of some of the "time wasting cheap guy callers"?

Setting a minimum does many things. It helps eliminate the problem clients right off the start. It sets you apart from your competition. And it shows your customer that you take what you do seriously. Be smart, make money, stay in business!

Rob Anspach has been in the cleaning industry for 18 years. He is an IICRC Master Textile Cleaner and the owner/operator of Premiere Carpet Cleaners in Lancaster County, PA. Rob is also a savvy marketer. He teaches businesses how to monetize their online and offline marketing experience, how to attract and retain affluent clients and how to profit from their passions. For more information, go to www.RobAnspach.com.