Hi !
Earlier this year, I bought a small window cleaning business from a guy. Pretty small business, about 50 clients. Part time job, all client are small to medium business (restaurant, small store, dentist, etc). The previous owner was invoicing with small NCR pads (the ones you buy in dollorama), was running the business with his own name, no official logo or anything "serious", etc.
- He told me the average time required to do the "run" was 2 days/week
- He told me he had good clients (no complaint, even if he had (rarely) to skip a week for any particular reason).
Now : I bought the clients, did the switch no one complained, didn't loose any client. He was right, customers are friendly. I did some branding, got a real name for the company, got a logo done, website, custom invoice, to look more serious.
BUT
It seems the average price he was charging was way too low. Even after doing the job for a couple weeks, my average salary is 24$/h (counting traveling time between job). This is way too low. I personally feel it should be at least 50$/h since I have to pay gas, more tax (being a self-employed), my car, equipment, etc. I feel I'm pretty quick at doing the job, so my speed isn't really an issue.
Now the interesting part : I recently knew how much a competitor of mine charge for the same business that I do (I have a couple of starbucks restaurant & my competitor have some others in the same city, same size). He do charge the DOUBLE. This is probably just normal, since he is looking at a 50$/h rate. So :
- I want to raise price. Since I'm new to my customer, how should I approach them with the price increase ? Should I tell them : Hey, I know you pay about 50% the current normal price in this town, you were lucky, but this is not viable in the long term for a serious company, this is why I have to increase the price by 75% ? (Point that I'm still cheaper than my competitor).
- Except the Starbucks that should be increased by 75%, I feel others should be raised at least by 40% to make it a more viable solution. Do you guys feel I will loose some clients ? How can I approach them ?
Majority of my client are in the 15-20$ (twice a month), so a 40% increase would jump the price to 21-28$ (So an average 16$ increase by month). Are they going to freak out ? Honestly, I feel a company with 5-10 employee on the payroll should'nt be so scared of a 16$ increase a month... but... how do you guys justify your price increase ?
- How would you approach them : In person so I can explain the reason & see their feeling about that or with an official letter sent by regular mail ? (Sounds more serious and official)
I know I should have double checked the price before to buy the company, but now it's done and I want to make that a profitable business.
Learn from your errors, and get stronger, that's how I think. But now I just don't want to do another error, so I'm asking for help from you guys !
Earlier this year, I bought a small window cleaning business from a guy. Pretty small business, about 50 clients. Part time job, all client are small to medium business (restaurant, small store, dentist, etc). The previous owner was invoicing with small NCR pads (the ones you buy in dollorama), was running the business with his own name, no official logo or anything "serious", etc.
- He told me the average time required to do the "run" was 2 days/week
- He told me he had good clients (no complaint, even if he had (rarely) to skip a week for any particular reason).
Now : I bought the clients, did the switch no one complained, didn't loose any client. He was right, customers are friendly. I did some branding, got a real name for the company, got a logo done, website, custom invoice, to look more serious.
BUT
It seems the average price he was charging was way too low. Even after doing the job for a couple weeks, my average salary is 24$/h (counting traveling time between job). This is way too low. I personally feel it should be at least 50$/h since I have to pay gas, more tax (being a self-employed), my car, equipment, etc. I feel I'm pretty quick at doing the job, so my speed isn't really an issue.
Now the interesting part : I recently knew how much a competitor of mine charge for the same business that I do (I have a couple of starbucks restaurant & my competitor have some others in the same city, same size). He do charge the DOUBLE. This is probably just normal, since he is looking at a 50$/h rate. So :
- I want to raise price. Since I'm new to my customer, how should I approach them with the price increase ? Should I tell them : Hey, I know you pay about 50% the current normal price in this town, you were lucky, but this is not viable in the long term for a serious company, this is why I have to increase the price by 75% ? (Point that I'm still cheaper than my competitor).
- Except the Starbucks that should be increased by 75%, I feel others should be raised at least by 40% to make it a more viable solution. Do you guys feel I will loose some clients ? How can I approach them ?
Majority of my client are in the 15-20$ (twice a month), so a 40% increase would jump the price to 21-28$ (So an average 16$ increase by month). Are they going to freak out ? Honestly, I feel a company with 5-10 employee on the payroll should'nt be so scared of a 16$ increase a month... but... how do you guys justify your price increase ?
- How would you approach them : In person so I can explain the reason & see their feeling about that or with an official letter sent by regular mail ? (Sounds more serious and official)
I know I should have double checked the price before to buy the company, but now it's done and I want to make that a profitable business.
Learn from your errors, and get stronger, that's how I think. But now I just don't want to do another error, so I'm asking for help from you guys !
from Window Cleaning Resource http://ift.tt/1yxx95H
Visit Us: Pine Country Window Cleaning
via IFTTTIFTTT
No comments:
Post a Comment