Is a $300 Service Rate Too High?

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By Anastasia Harold

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You may be familiar with our Hourly Rates Study, showing the “average” hourly rates of service businesses across the country. The truth is, the average doesn’t really matter to your business at all (but we provide it to give you a basic idea). Here’s why:

  • On average, 1 in 3 service companies go out of business annually. Do you really want to compare your company to one that’s insolvent? That’s like comparing your diet and exercise regimen to someone on their deathbed.
  • Every business has different overhead - it makes absolutely no sense to compare your hourly billing rate to another company’s. If you need a better understanding of your company overhead, here’s some help.
  • Do you have the best technicians in town, or the most average? If you have the best technicians, you’re probably paying them the most. If not, they’re going to leave you soon. In order to retain the best talent, you need to pay them more, which means you need to charge more. Same goes for anyone answering your phones or selling your installs and replacements.

Some companies tell me they have to charge more, because they’re in an urban area and everything costs more, including parking tickets and bridge tolls. Some companies tell me they have to charge less, because they’re in an urban area and there are lots of competing businesses around. Other companies say they have to charge more, because they service rural areas and drive times are longer, and many parts must be special ordered. Yet still others tell me they have to charge less because they service rural areas, and their customers are used to lower prices.

Hopefully you get the point. I know companies that charge $85 an hour and others $300.  And I know companies that charge everywhere in between. Your issues will arise when you’re not providing enough value to your customers for the price, but I’ll cover that in another blog!

Okay, so now you’re wondering “How much should my hourly rate be?” Only you know the answer to that. If you don’t know, use this guide to Setting Your Service Rates.

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