It’s obvious to say that correct pricing is of paramount importance in the trades, but finding the pricing sweet spot isn’t always obvious.
Price too low and you cost yourself income; price too high and you may price yourself out of the market. Finding the right number can mean the difference between a good and a great year, or between marginal growth and excellent growth.
ServiceTitan offers a solution with Price Insights, which is part of the cloud-based software for the trades’ Pricebook Pro add-on.
Price Insights collects information from ServiceTitan customers in a region or area. One mouse click on a business’ pricing page can show average pricing for a job, and tell a company where it lands with its pricing.
All of that information is geared to answer what in the past had been a bit like grabbing smoke: determining if a business is pricing correctly. Laura Thornton, President and CEO of TNT Home Services in Firestone, Colorado, said that kind of information is more important than ever in today’s widely fluctuating cost and pricing environment.
Businesses do not typically share pricing information with their competitors, though it is legal to do so (as long as businesses do not conspire to fix prices between them). Thornton said anything added to the data stream is potentially beneficial.
“The market has clearly shifted, and clients are more price sensitive than ever,” she said.
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How does Price Insights work at TNT?
Thornton showed the value of Price Insights in one example. While talking about it, she also showed how she and her husband and business partner, Ron, work out the financials.
“If (our pricing) is completely outrageous compared to what everybody else is charging, I will bring it to Ronnie and I will say, ‘OK, look, do I need to lower the price on this or is everybody else, are they just crazy?’ And he's pretty good at nailing it,” Thornton said.
Thornton brought up one job where TNT’s price was about 11% above the Price Insights average. After review, TNT stuck with its price, and was happy it did.
“We charged what we were supposed to charge,” she said. “We might have actually charged less than we should have. We're not a handyman, and that's where I think the impression of a home service is. We can say, ‘Sir, we are constantly monitoring the market for regional averages,’ which we do through the Price Insights.”
Price Insights is not meant to be determinative for every job for every company. It is merely a guide that allows businesses to see how their pricing compares. From there, they can decide the best approach for them.
Thornton said she felt like “a kid in a candy store” when she first saw Price Insights. She’s now part of the Beta testing group. As she and her husband studied pricing, they saw wide variations in what they are charging and the average. TNT was way too low on some jobs compared to the aggregate, but way too high on others.
“There was no rhyme or reason,” she said. “It was all over the place.”
Priced to fit the brand
TNT did not mind being on the high end. The word “craftsmanship” appears on the company website, meaning they market their quality work and their promise to do more.
“We have three trades in our company: plumbing, heating/cooling, and electrical,” she said. “We're not going to do any service if we just go into a house and we don't go and make sure their water heater is good.”
A few years ago, TNT hired a company to study its pricebook to try to ensure they were at the higher end of average (remember the craftsmanship).
“Cost us a ton of money,” Thornton said. “We ended up not staying on with their model of pricing. The fact that this is built in (in ServiceTitan), even with a little more manual work, is pretty invaluable.”
She also made clear how there is a link between Price Insights and profitability.
“It's really, really important that we are always aware of our margins,” she said. “My technicians always, always know what they should be charging because we don't keep secrets. We want the guys to know exactly what it's going to take.
“And we tell them, ‘Look, this is the minimum to keep the lights on. This is to keep you getting continuing education. This is the minimum so that we can do a couple of family outings.’
“If you can charge 15% more and the client is still OK with it, we're still within the regional average, great. I just never want us to be that company that's at the very top.”
Not just ‘spaghetti on a wall’
Using that model becomes easier with Price Insights. The numbers are real, and right in front of her on the computer screen.
“We don't ever just want to throw spaghetti on a wall and see what sticks, right?” she said. “That was one of our values, to always be in that range that was affordable. I never want my clients, which we've seen more than ever this summer, have to choose between keeping the lights on in their house and having cold air, right? That's really, really unfortunate.
“And so we want to make sure that we're staying in the average. In conjunction with our financing, we're giving them options, and the insights really allow us to do that.”
TNT’s goal is to be a national company. Thornton said she feels the business has established a strong presence in Denver, with 7,400 square feet of space that includes a warehouse. The hope is to become regional in 2024, and national beyond that – while keeping the same values it established as a local business, including integrity, service before self, and excellence throughout, Thornton said.
“We want to continue to have our small town values here in Firestone, Colo., all over,” she said. “And so that's why we're going to be leveraging technology.”
ServiceTitan Software
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