Service Pricing

Discussion in 'Growing and Managing a Business' started by Mountain Man, Jan 20, 2011.

  1. Mountain Man

    Mountain Man
    uix_expand uix_collapse
    Member

    Joined:
    Jul 14, 2010
    Messages:
    87
    Likes Received:
    9
    When thinking about the service industry (electrical, plumbing, etc.) what is a reasonable travel, or trip charge.
    I install and repair communications equipment (telephone, data, coax) mostly for small business' but also some residential and new construction. I do not charge travel within a 40 km (25 mile) radius, only the billable time (minimum 1hr). Now I am getting calls from further away. I do not want to turn them away but I can't justify traveling 1hr or more for free.
    As a customer (residential or business) what would you consider reasonable.
     
  2. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,578
    Likes Received:
    1,163
    In addition to the cost and expense of travelling you also have the opportunity cost of other work not done. In other words you could be doing other paid work, during the time that you are travelling. Hence, you are completely justified to charge for travelling and it is something you will need to do for your business.

    Would it be possible or practical for you to charge based on each individual job that you are pricing? For example say a job was 60KM away in an urban area with heavy traffic, it would be more difficult to travel to that area than to another job 60KM away but in an area with much lighter traffic. If you have set prices, e.g. a certain rate per mile, it would be difficult to account for traffic levels. However, if your charging structure is more flexible you yourself would know how difficult it is going to be to reach a certain destination and you could charge accordingly.

    What is the market potential like for your services, within that 40KM area? Would your time be better spent promoting your services more in your local area, than travelling further afield?
     
  3. scifi

    scifi
    uix_expand uix_collapse
    Member

    Joined:
    Nov 2, 2008
    Messages:
    1,207
    Likes Received:
    44
    I would advice you to figure your non productive days in a peculiar week to account for such services... Ask your clients out of your comfort zone of travel to pay you a certain visiting fee..club them together and fix one such day...But as Fergal says you should take care of your opportunity cost i.e. clients in your vicinity of travel should be given service first and other customer from far away should not be entertained at their cost..
    Also, if you see business from far away customers is increasing, then seriously consider for employing some working hand under you,,...!!
     
  4. Mountain Man

    Mountain Man
    uix_expand uix_collapse
    Member

    Joined:
    Jul 14, 2010
    Messages:
    87
    Likes Received:
    9
    Thanks for your input guys. Most of my customers are within a 1/2 hr drive and I am happy to service them without charging any travel charges. If they are on the outer edge of that I try to make it worth my while by waiting until I have multiple jobs or some other task in that direction, when possible. The problem comes when I receive a call from someone 2hrs away (one way) I simply can't drive 4 hrs to spend half an hour making a few connections for $50. I understand there will come a distance where it is cheaper for them to call someone local, and there is nothing I can do about that, in fact I would prefer to work close to home. I am just trying to find a fair balance.
     

Share This Page