What a ride, huh? Just when we thought we had a path forward figured out—following an unprecedented year in which the global pandemic disrupted everything—contractors now face the perfect storm of a surging demand for home services while rising material costs, supply delays, and a labor shortage hamper their efforts.
As equipment and material prices ebb and flow in response to the current inventory crisis, contractors across the country are grappling with the need to continue delivering great customer service while also turning a profit. According to ServiceTitan’s in-house pricebook experts, it may be a matter of simply making sure your services are priced appropriately—and competitively.
For any home services business to succeed, it’s absolutely critical to protect your profit margins, ensure accurate costs for materials and equipment, and adjust services and pricing as the market changes, says ServiceTitan Principal Product Manager Eyal Binshtock.
“I realize how much time that takes and how difficult it is to stay up to date on those kinds of things,” Binshtock says. “That's the nature of the business. There's 20 things to do, and time for 10.”
In a recent ServiceTitan webinar, Binshtock and two other pricebook gurus outline some key pricebook strategies and maintenance tips that every contractor in the trades needs to know, including:
Fundamentals of pricebook maintenance
ServiceTitan Core Pricebook vs. Pricebook Pro
How often to update your pricebook
Bulk editing within ServiceTitan Pricebook
Leveraging supplier integrations via Pricebook Connect
How to better leverage ServiceTitan Pricebook purchasing module
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Fundamentals of pricebook maintenance
When was the last time you updated your pricebook? If you can’t answer this question or think you just don’t have time to do this critical task, then you’re likely leaving your profit margins unprotected.
“What we do see is, when customers are maintaining their pricebooks, building out the pricebooks, checking in, and updating costs, the higher their revenue tends to be,” Binshtock says. “I would strive to check into your pricebook at least on a monthly basis.”
But that type of frequency doesn’t require a full pricebook audit, he adds.
“Talk to your suppliers, look at a few items, look at the costs in your pricebook, see if they match up. If not, you've got a good sense for where you might be losing a little bit of money or maybe just not making quite as much,” Binshtock says.
Before JC McAllister joined ServiceTitan in 2020, he served as the sole resource dedicated to managing and updating the pricebook at Casteel Heating, Cooling, Plumbing and Electrical, a larger operation in Georgia that prioritized the financial task.
“And I still spent months building out our pricebook,” says McAllister, now a ServiceTitan Product Manager. “Anytime we did a major change, I spent months doing it. Like going in and finding free-source pictures for all the tasks you're trying to do, and grabbing that information. It's something that I personally spent a lot of time doing.”
ServiceTitan Solutions Architect Ryan Stare says he once spent his entire four-day Thanksgiving break building out and updating a pricebook when he served as General Manager at Kern Heating & Cooling Co. in Illinois. He describes it as more of an urgent exercise to reduce job costs ahead of a busy winter season.
“I like to think of the pricebook as a living, breathing document,” Stare says. “It's just always something that requires tweaking as you go, and updating as things change in the industry.”
ServiceTitan Core Pricebook vs. Pricebook Pro
In the past year, McAllister helped onboard five shops to ServiceTitan, which gives them access to the core pricebook features. But, he says, they still needed to spend some time building out their own customized pricebook offerings with images, product descriptions, upgrade options, materials and equipment, etc.
For customers on ServiceTitan Pricebook Pro, on the other hand, the best practices for pricebook management are already set up.
“Customers on Pricebook Pro see a 13% increase in revenue, year over year,” Binshtock says, but even so, “you don't have to be on Pricebook Pro to see those kinds of metrics.
“The reason customers see that is because Pricebook Pro has images, upgrades and recommendations, all the materials, and equipment links to services,” Binshtock adds. “And that's something everyone can do on their own.”
McAllister says he wishes Pricebook Pro had been available when he worked for Casteel.
“Having the ability to leverage that today as somebody coming on board gives you a much faster path to being profitable, and gives you a much shorter time as far as having to go in and manage those different actions,” McAllister says.
How often to update your pricebook
The three pricebook experts have slightly different takes on how often to update your pricebook.
McAllister suggests updating your pricing anytime you receive cost updates from vendors, as well as each time your company offers any new services or products. He recommends doing a full pricebook audit quarterly or every six months.
“We would look at our prices and our margins. We'd take a review of our Profit & Loss, and basically back into the numbers to make sure we were priced appropriately,” McAllister explains. “Outside of that, it was really at the mercy of how frequently our vendors made updates, or when we wanted to offer new services or solve any changes from external sources.”
For Stare, running monthly job-costing reports through his built-out pricebook helped him determine better profit margins. He can quickly see whether the company is hitting the mark, then set prices accordingly.
“It’s so powerful to just be running that, and making sure at the end of the month, on my average job costing for my install crew, am I hitting the gross profit dollars that I need to? And adjusting from there, even outside of vendor changes,” Stare says. “That's why running reports for job costing and having all these items built in the pricebook to begin with, just sets you up for success so much.”
Binshtock says contractors in the trades need to think differently about managing and updating their pricebook. Rather than thinking of it as a chore, hassle, or afterthought, they need to think of their pricebook as a top priority for their business.
“The more companies tend to think about the pricebook as an investment, and think about the time spent in the pricebook—maintaining, updating, adding—the more of a return on investment they tend to see,” Binshtock says.
For instance, larger companies on ServiceTitan tend to make the pricebook a priority and dedicate staff to maintain it, and they see larger returns as a result. The ServiceTitan Pricebook is built to maximize conversion rates, grow average ticket sizes, and improve overall operational efficiency.
“The time spent there should be considered a very important investment in your business, because you're moving the needle on your revenue, you're moving the needle on your margin, and you're potentially saving your employees time,” Binshtock adds.
Bulk editing within the ServiceTitan Pricebook
As prices for materials and supplies fluctuate from month to month, some companies may need to update prices on multiple items on a more frequent basis. Last summer, ServiceTitan announced advanced editing and filtering tools that make managing your pricebook a snap.
You can now edit services, materials, or equipment by simply hovering over content, clicking, and making changes as needed. You can also edit content for multiple services, materials, or equipment all at once by using the new bulk editing feature.
For instance, you can select multiple items in your pricebook to edit, then you can easily:
Add or remove images
Add or remove a category
Add or replace item descriptions
Add or remove a primary vendor
Add or remove time increments to all items selected
Increase, decrease, or set prices as a flat amount or percentage
“We're in a unique environment today with the supply chain kind of going haywire, because of demand coming out of COVID. And I'm sure you're all experiencing that pain on a day-to-day basis,” Binshtock says. “What I'm showing is a solution that gets big updates done in a matter of five minutes.”
The best solution for price setting and job costing, of course, would be to determine your exact costs from your suppliers, then figure profit margins from there. Applying a quick price update through bulk editing, especially when you need to adjust quickly, still provides value, Binshtock adds.
“If you're really just not able to spend the hours and hours, at least you're trying to protect profit margins here,” he adds.
The ServiceTitan Pricebook also allows you to do a markup in bulk for all of your materials, basically updating all of your company’s services based on the new material costs. The price-setup wizard feature allows you to set billable rates, surcharges, member discounts, and more.
“This functionality is getting rebuilt,” Binshtock says. “It's good now, but it's going to get great toward the end of the year with a lot of other functionality, like automatically adjusting pricing for after hours between certain time periods, and those kinds of things.”
Leveraging supplier integrations via Pricebook Connect
If your company works with a particular supplier that’s integrated on ServiceTitan, you can leverage that relationship to your advantage to keep your prices up to par and your margins nice and tight.
With supplier catalogs available through Pricebook Connect, any time an integrated supplier makes changes, ServiceTitan drives the entire pricebook update process—from making updates to pricing based on the latest materials costs and adding new marketing descriptions and images, to receiving automatic notifications to add upgrades or recommendations that sell well for specific services.
Pricebook Connect is available only to ServiceTitan customers using ServiceTitan Pricebook Pro or any supplier integrations. For instance, an HVAC company may want to add all of the copper tubing offerings from R.E. Michael to their pricebook, and Pricebook Connect makes that process simple and easy.
If you want to search suppliers for cost updates only, simply disable or hide the other items from view, Binshtock says.
“This is a really good way to be able to just focus on the things you need to do now in your pricebook maintenance,” he advises. “And we're constantly working on adding suppliers. If your supplier is not available, make sure you reach out to your supplier and let them know you want that integration.”
How to better leverage ServiceTitan’s Pricebook purchasing module
While you may think just increasing prices will solve your financial woes, Stare says the actual procurement process for your materials and supplies matters a great deal, too, when calculating overhead and other company expenses.
Stare says the goal for the purchasing module in ServiceTitan Pricebook was to make purchasing easy and streamlined right within the software. However, recent data shows a low number of customers are actually using it.
When creating a purchase order in ServiceTitan, you select a business unit, then the vendor, and you mark what type of order it is and where it needs to be sent.
“It kind of allows you to double check your vendors as well,” Stare says. “Sometimes, there are sneaky price changes, especially on refrigerants right now, with how the industry is moving and supplies are changing.”
It’s also a huge time saver.
“I can create this purchase order, send it to my vendor, and never lift up the phone,” Stare says.
The feature also gives your company a checklist for what items you ordered, when they’re due to arrive, and produces a bill on the spot to ensure you pay the right amount. With the purchasing module, you can also export the bill directly to QuickBooks, eliminating wasted time spent on double entry.
“These are just methods to help protect those profits from a different standpoint,” Stare says. “Instead of on the gross side directly impacting it, we're thinking about the back-end side of it, the actual ordering and receiving of these purchase orders, and how to save money on that end of it.”
Procure-to-Pay on the horizon
The pricebook gurus also announced a new, upcoming feature for ServiceTitan Pricebook: Procure-to-Pay in real time. It’s in the beta-testing phase.
“It enables you, when you're creating the purchase order, to see real-time availability of those products and the price of those products,” McAllister says. “And if the price, when you're creating the purchase order, is different from the price in the pricebook, you can actually update the pricing at that time in your pricebook.
“It's ensuring that when I order something, am I going to be able to get those products? Do I have the correct cost for those products? And then additionally, it gives you the functionality to actually go ahead and pay your bills directly out of ServiceTitan to those vendors.”
