When is it OK to Give Price Breaks?

If you’re haphazardly dishing out price breaks, it’s time to slow your roll. Good service isn’t cheap and cheap service isn’t good.
When is it OK to Give Price Breaks?
In the end, if you’re running a business, then price integrity has to be a priority.

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In service-based industries, it’s difficult to know where to draw the line with discounts, and when to simply let the business go. This might be even more important in the onsite industry. You, like most onsite installation and inspection company owners, have probably run into a few customers who treat the industry as a commodity. They look at your pricing and ask for unrealistic discounts because they don’t understand the cost of running an onsite company. 

Knowing when to give price breaks to potential customers becomes a balancing act where you have to assess how much business this potential customer will bring you in the long run, and how much profit you’re willing to sacrifice to get their business.  

As owners and operators in the onsite industry, you know how much time, money and work go into keeping your business afloat. There are the upfront costs of doing business such as buying trucks and other equipment, as well as paying your workers, insurance and several other expenses. Even though you are aware of these costs, your potential customers may not be and request large pricing breaks. 

If a potential client is just calling for a single inspection that won’t give you much business in the future, you’ll likely want to just say, “Sorry, we can’t reduce the price any further.” The client could respond in one of two ways. He or she might request prices from competitors who are willing to give the price breaks to get the business, or he or she might realize other onsite companies have similar pricing and be willing to shell out the extra money. Either way, you know that you have to keep your profit margins in a place that’s comfortable for you.

If it’s a large builder requiring your installation services on several new construction sites in the future, you might want to calculate the margins on the volume of services (and time) that you’d be providing. Coming down on price a bit to gain large amounts of business can pay off in the end, and you might eventually be able to raise their prices when they see that the service you provide is so important. In this case, however, keep the margins in a place where you are still profitable. If you’re only making small profits — or losing money — it’s not worth it for you in the long run.

In the end, if you’re running a business, then price integrity has to be a priority. Building a culture around haphazardly giving price breaks simply to gain more business will result in huge profit losses. Stick to your prices and continue providing top-notch service, and you’ll be surprised how quickly people are willing to pay you what you know you are worth. Remember, good service isn’t cheap and cheap service isn’t good. 

About the Author

Erin Van Schepen is marketing coordinator for On Site Companies, a portable solutions company based out of St. Paul, Minn. For 25 years, the company has provided quality equipment coupled with excellent customer service. Read more about On Site’s story at www.promonthly.com/editorial/2014/07/best_foor_forward, or visit www.onsiteco.com.


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