Maintenance Pricing: Fear or Fact?
The top profit killer in service departments nationally continues to be underpriced maintenance agreements. Common reasons dealers undervalue their maintenance pricing:
- Used as a loss leader to attract new business
- Lack of understanding of service department operating costs
- Do not understand how to price the agreements
- Trying to compete with those that offer loss leaders
- Ineffective dispatching and scheduling practices
Often when realizing that prices need to increase, owners and managers process fears over facts.
Fear: “If I raise my price, we will lose our customers to others in the marketplace.”
Fact: Yes, you will lose some customers based on price but with a well-planned strategy, it will be less than 10-12% AND you will start being profitable on the rest.
So what steps can you take to focus on the facts of maintenance pricing rather than the fears?
Evaluate the value and service delivery of your current program.
Customers are more accepting of price increases if you are delivering top notch service. Review your program and review the stats behind them. Are you completing the maintenance on time? Do you have a defined list of tasks performed that shows the value of your work? Are all your technicians completing the same level of service? If there is a deficit in any of these areas, fix them.
Increase the price to all new customers, with staged increases to your loyal customer base.
Share the costs to perform maintenance with your team so they understand why a change is needed. Consider adding other value-added services and benefits, and develop different levels of service to meet the individual needs and wants of your clients. You can also implement an accessory program to help bridge the gap in profits.
Focus on efficiencies.
Schedule geographically, ideally looking 3-5 weeks out. Ensure all technicians are following a task list they have helped develop. ACCA has developed a standard that you can download, Quality Maintenance of Residential HVAC Systems. This resource will help guide your team on what is required.
Make sure your team is on board.
Support from the entire company is crucial to creating a “maintenance is essential” culture. Your goal should be to see that everyone has bought in to the program to ensure no customer “gets through the door” without hearing about your program. If you are currently converting less than 20% of your opportunities, your team is not on board or they are not being led towards a goal.
It is important to consistently solicit feedback from your team on obstacles or challenges they face and work together on the solution. Switching from fears to facts when it comes to your maintenance program requires an ongoing process of development for both you and your team.
BDR senior service coach and trainer
Want to learn more about how you can help weatherproof your business with a profitable, smoothly functioning maintenance program?
Register now for BDR University’s live virtual Residential Maintenance training event – April 27 thru April 29!