Unlike product-based businesses that sell physical goods, KEC companies are service companies that face unique challenges when it comes to pricing their services.
One of the most common pricing strategies for KEC companies is to charge an hourly rate based on the time spent on delivering the service. This means that the KEC company calculates how much it costs them to provide one hour of service and then multiplies that by the number of hours worked for each client. However, make sure to include the time it takes your crew to drive there and not just on the job time. Consider how much time your staff spends interacting with the client to set the appointment, sending over invoices, and collecting payment. All these tasks take time and cost you labor, and you deserve to get paid for all the time it takes you to interact with each of your customers.
Here are some benefits of using an hourly pricing strategy once you understand all the labor you should be charging for.
- It reduces the risk of underpricing your KEC service: By setting an hourly rate based on your actual costs and desired profit margin, you can ensure that you are charging enough to cover your expenses and earn a reasonable income.
- It helps you track your productivity and profitability: By charging an hourly rate based on the time spent on each project, you can easily measure how efficient and effective you are at delivering your services. You can also monitor how profitable each project is by comparing your revenue with your costs.
- It helps you communicate your value to your clients: By setting an hourly rate based on your actual costs and desired profit margin, you can demonstrate to your clients that you are providing quality services that are worth paying for. You can also justify any price increases due to inflation and market changes by showing how they affect your costs.
Setting an hourly rate and sticking with it is a simple but effective pricing strategy for a KEC company to ensure they achieve their desired profitability. If you take on a client and after two cleanings it becomes clear are not hitting your target time, communicate with your customer and increase the price to match the time it takes to complete the service in a manner that satisfies your customer. Clients won’t decrease their standards, so don’t decrease your price. Lastly consider increasing some of your newfound profit back into your company by implementing technology such as My Tech Pix to speed up the time it takes your staff to review pictures and provide a high level of quality assurance to justify your KEC prices.
