How Much Price Resistance Is Too Much For Your Cleaning Business?
How do I know how much to charge for my cleaning services? This is a question we get all the time from cleaning business owners. Most people are looking for a ball-park figure, which is just about impossible to give because of the vast number of variables when it comes to cleaning.
But you need to start somewhere, and what we recommend is to figure out the hourly rate you need to make and then estimate your time for the cleaning. Let's do a couple examples so we can use price resistance as a gauge to determine if your price is too high or too low.
Example #1:
Jane needs to get clients quickly so she's decided to charge $18 per hour for her cleaning services. It seems to be working - she's quickly picking up clients and has never encountered any price resistance for her service.
Example #2:
Diane has decided that she's going to provide a high-quality, elite cleaning service so she's going to charge $45 per hour. She knows that she's going to have some price resistance because some people simply want the lowest priced service. But she's getting price resistance from just about 100% of her prospects.
So how do we use price resistance to determine if your price is too low or too high? Here is the general rule of thumb.
- If no one complains about your price, it's probably too low. Jane is not receiving complaints about her price so one might think it must be the right price. But Jane has quickly found out that by pricing her price too low, she's working like crazy and not making a profit. Her price is too low.
- If most people complain about your price, it's too high. Diane's market is not willing to pay $45 per hour so she's getting price resistance from almost all of her prospects and she's finding it difficult to pick up any new clients. Her price is probably too high.
Note about Diane's case. One thing to keep in mind when pricing your services in a higher price range. If you're facing a lot of resistance, make sure you are prospecting to the right target market. I've seen a lot of examples of cleaning business owners setting their price but not marketing to people that can afford that price. So before you reduce your price, make sure you're marketing to the right group of people.
So if no price resistance is too low and 100 percent is too high, how much price resistance is just right? The answer is 15 to 20%.
Some price resistance is a good thing and here is why. About 10% of prospects fit into one of the following categories:
- Some prospects are going to complain about any price you give them – that's just what they do.
- Some prospects are always looking for a deal.
- Some prospects simply assume every price quote given to them is overstated.
- Some prospects had a price in mind before they ever talked to you. So any price you give them other than the one they wanted to pay will be met with resistance.
There isn't anything you can do with this 10% of prospects. So simply discount them as possible clients.
Next, look at the remaining cases of price resistance and calculate how often you encounter resistance. Your goal is to have no more than 10% resistance of these remaining cases – for a total of about 20%. If you fall in that 15 to 20% total price resistance your price is about where it should be. If your price resistance is over 20%, it's time to start scaling back on your price.
In order to track price resistance in your cleaning company, use a chart like the one below. In this example, the cleaning company had 20% price resistance, which is about right.
