Square foot vs. Room pricing

Dear Readers,
I wanted to share with you a chat I found on Cleanfax Insider.
I thought the topic would be of great interest to my readers
here. With the permission of Jeff Cross, I am reprinting a portion
of that blog. If you wish to read the entire discussion thread,
you can find it on the Cleanfax website (www.cleanfaxonline.com)
I hope you find it useful:

Subject: Square foot vs. room pricing

Posted By Jeff Cross on 7/23/2008 at 6:56:43 AM

At a recent seminar I attended, a debate on square foot vs. room pricing proved to be interesting. This has been a topic of discussion for many of you, but this time, let’s discuss how the two methods of pricing affect your productivity. For square foot pricing, do you find you get higher prices that help cover the extra time involved in estimates? For room pricing, do you save enough by not having to do in-home estimates to warrant perhaps losing some revenue on larger rooms?

Responses:

RE: Square foot vs. room pricing: Steve Marsh: 7/23/2008 3:32:03 PM

As in so many issues in our industry there is no one correct answer that applies to all businesses. I would like to suggest that we change the question to which companies benefit from offering room pricing and which companies benefit from square foot pricing. Both approaches are legitimate strategies.

I found that per room pricing is beneficial to companies that charge a competitively low price and depend on advertising to provide a majority of the jobs performed. This approach eliminates a massive amount of time on the phone and in person to establish the cleaning price. Per room pricing allows consumers to calculate their own cost to have their carpets cleaned. For the many consumers where price is one of their primary deciding factors in choosing a cleaner, this approach is great.

For companies that charge above budget prices and get most of their jobs from repeat and referrals I find square foot pricing advantageous. The customers of these companies typically are less concerned with the lowest price and more concerned about quality and service. These customers are likely to repeat and are worth investing the time to measure their rooms once (keep the information so you never have to do it again). This is a more fair and accurate pricing system and is easier to raise prices to higher levels with this approach.

RE: Square foot vs. room pricing: Dan Mabesoone: 7/23/2008 8:00:48 PM

I agree with Steve, but i prefer pricing by the square foot. To me, there are several advantages.

I believe we are MORE productive, not less. I pre-inspect 95% of the carpets we clean. During the pre-inspection, I qualify both the expectations of our services and I prequalify the client! There is no "quibbling" over price. It's all established before the technician even arrives. If the customer decides not to have us do the work, there is no lost production time because my techs are cleaning the carpets that were previously inspected and priced by me.

I also believe we are more productive because i make notes on the estimate form that help the technicians, such as: driveway hard to find; step driveway so back in; red house with green shutters; advised customer traffic areas will still look worn even after cleaning; customer concerned about drying times; customer had problems with previous cleaner, etc.

Also, for a variety of reasons, not everyone is a customer that I want to do work for. I get to determine that before we do any work, and avoid problems by eliminating someone we shouldn't be working for and again eliminate any lost production time.

I also get a higher ticket price. I offer protector on every job, and about 50% of my customers take it. and if they decide against it, they have several days to think about it before we do the work, and many times they change their mind and decide to take the protector.

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Thanks for reading with me,

Chris