Pricing for Service Businesses

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From the video...

Hi this is Judi Otton and today I am going to give you my final pricing video as we talk through ending this crazy year and starting a new one. Today I’m going to talk about pricing for service businesses. Now obviously in a service business, labor is by far your biggest expense. So I’m going to give you three tips and a little extra bonus tip because it’s the holidays. First of all like every other business you need to know what it’s costing you to deliver your services, which means time tracking. Ideally your whole staff and you are tracking their time by customer and by job, so you can see – I charged X for this job and it cost me Y and with a service business it can vary. So there may be jobs where you where you lose money, but take that information and learn from it as your bidding next time. Second of all because your staff and labor is your highest expense, anything, anything at all that you can do to increase the efficiency there is fantastic. Any training, investments in equipment, and especially process development. I’ve been able to do a lot with some of my clients by creating standard work processes for their staff to do some of the things that they do regularly. The third tip that I want to offer you is watch your turnover. Turnover can cost up to 75% of the employee’s annual salary. And that’s just the quantifiable costs that’s not counting the disruption and the loss of institutional knowledge when you lose someone. In this time where there’s so much churn and so many resignations and people looking for new jobs, make sure that you’re really, really paying attention to your high performers. And finally , a little bonus tip that I’m going to offer you. Something that I’m noticing with my clients is that as we’re budgeting for next year, we’re budgeting more money than they ever have for raises. Labor rates are going up like many things and you want to compensate your people appropriately. If you missed the other two tips or you want to learn more, Check out my playlist. I’m posting the link below (https://www.youtube.com/playlist?list=PLOg1moPYQKRyN3rN9JfqXC_cQuht0a7ei) and stay tuned next week as we wrap up this year and headed into the next year strong. This is Judi Otton and with GrowthCast and I’ll be back next week with another Fiscal Fitness Tip of the Week.

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