We are supposed to be living the “Gig Economy”, where we can have anything we need to have done, done for us. Despite this, every day I am constantly told by service people how booked they are and how jammed their schedule is. This is a fundamental breakdown of supply and demand in the marketplace.
Over the last two weeks, I’ve been provided with the following excuses:
- Massage Therapist – Earliest I have for you is 12 days away.
- Piano Teacher – I can’t take on any more students right now
- Car Detailer – We are booking into next month right now
- Programmer – I’m two months away before I can take on anything
The craziest thing about all of these answers? None of them asked me the urgency of the problem, or if I was willing to pay additional costs to accommodate a quicker turnaround. I absolutely was.
I’m going to show you how I would handle each of the occupations when those situations come up. You will make more money and leave your clients happier.
Massage Therapist
Getting a massage in my home town is harder than getting front row tickets to see Elton John. This is frustrating at the best of times but multiplied when I have hurt myself the day before. When I call and ask for an appointment, I need it today. Two appointments next week doesn’t help with my pain today.
Every massage place in my city charges around $75 – $85 for a one-hour session. Everyone is fully booked every week. Everyone is charging the same because that’s what they believe the market will bear. In actuality, the market is screaming at them to keep raising the prices.
Go up to $95 and see if you are fully booked. Still booked solid? Try $110. Keep going every 6 months until you start seeing weeks you are not fully booked.
When I call and I’m in pain, I need help. I need it today, not tomorrow and definitely not next week. At this point, the value of your service has shifted dramatically. I am no longer looking at $85 for a relaxing session. I’m looking for you to help me relieve my pain.
It’s completely acceptable for you to charge $250 to get me in that day for an hour that day. Remember that your value has shifted, and I’m not paying you $250 to help me get out of pain. Much different circumstance and situation from your customers who booked 2 wees ago.
Piano Teacher
I was shocked when I received the response back from my email. “We are not accepting any more students right now”. They did not ask how often I was looking to have lessons, commitment level, or frequency. Most importantly, they didn’t ask anything about my goals or price I was willing to endure.
I always default with an idea that service people are around $100 an hour and go up and down from there. I was shocked to find out that this organization charged only $45 / hour. They could literally have 2-for-1 value on me as a client, and instead, they provided the blanket response.
Music lessons became commoditized years ago when they started focusing on children. Due to the market aimed at parents, the price was driven down and down. Now even highly trained professionals are under $50 an hour.
Big News: You don’t have to charge everyone the same amount.
Charging me more, and demand more out of me. I’m an adult and I can decide whether or not to continue. Start with a high bar. It’s easier to go down then go up.
Car Servicing & Detailing
I have kids and I have clients ride in my car. Those two things are not compatible with each other. Sometimes after a weekend with my kids, I’ll have milkshake stains on the seats and fries on the floor (ok, this might be me doing this).
Monday morning comes and I NEED my car cleaned up for my Tuesday morning meeting. My Monday’s are always jam-packed. I need someone to take the car and return it job completed.
We all know where this is going by now. The person is fully booked and unable to accommodate. Once again, everyone is charging around the exact same rates and have the exact same schedules.
It’s important to remember that I’m not paying for a car cleaning on Mondays. I’m paying for the clean and professional image you are going to help me present on Tuesday. What would you value that at?
Programmers
We are the worst at this. We believe we are already charging a premium, and that there is a natural ceiling we should be hitting. I can guarantee that you are not charging the maximum the market can bear.
I have different clients that pay different rates. The reason is they all have different needs and different time frames they need their results by. I have had a client offer me a $300K bonus to get something done in 30 days (the laws of physics prevented this from happening). I had another client who didn’t want to pay $22K for the same work.
BMW’s website going offline is a bigger disaster then your local barbershop website going offline. We understand that but have a problem charging BMW $5000 an hour to fix the problem. In reality, BMW is probably losing tens of thousands per hour and would gladly pay that rate. Are you going to turn them down if they call, or are you going to find a way to make it work for that rate?
Takeaways
I covered four service businesses that I have dealt with recently, but the advice certainly extends to all service-based businesses: hairdressers, carpenters, electricians, etc.
- If you are fully booked, you’ve underpriced your services
- Never turn away business because you are booked. You might have just turned away your largest and best client.
- Charge for the value you are giving to that client, not the market as a whole