Rule 2: If you have so much work you can’t get it done as soon as your customers would like, you’re not charging enough.
I’m going to emphasize the next part because it’s really interesting to think about.
In any professional service business, clients tend to come in bunches. Just when you think you’re getting caught up, the phone will ring off the hook. The object of being in business is not to do a lot of work, however, it is to make a profit. That may seem like an old-fashioned idea, but it’s still a good one. Sure, we like our work and want to stay busy, but we are still in business and should act like it.
If you are constantly behind, that is, not able to get work done in a timely manner, it is most likely symptomatic of a poor pricing structure. Unless you are just poorly organized and inefficient, you should be able to turn work around quite quickly, because that is what will set you apart from other surveying firms in your market area. If you are reasonably efficient in doing your work, and you can’t get it done, your prices are probably too low.
Raise your prices and see what happens. Usually, when I suggest this to someone, I get a response like “I’ll be out of business in 30 days, it’s so price competitive around here.” In my experience “around here” is anywhere and it’s pretty much the same one place as another. Some markets are more price-sensitive than others, of course. If you happen to be in the “mortgage survey” business, price competition is fierce, because this type of service is generally regarded as a commodity and one surveyor is just as good as another for that particular sector of the market. But for most surveying services, it’s simply not the case, regardless of the irrational fears of some land surveyors.
Consider this: What would happen if you doubled your rates and did half the work? Would you make more or less money? The answer of course, is that you would make nearly twice as much money. You would have the same amount of revenue and somewhat more than half the cost. No one is willing to bet his or her business on such a tactic, of course, but the principle is sound. Test the market by raising your rates 10%, then 20% and give it a try.
What would happen if this tactic were successful? The first thing, logically, is that you would lose some accounts. That’s to be expected, inasmuch as there is some price sensitivity in the market for land surveying services. But the market doesn’t always behave logically –sometimes a higher price is perceived as associated with a better service.
The second thing that would happen is that, because you have less work, you can get it done faster, and thereby improve your market position. A reputation for fast delivery will spread quite rapidly and may result in enough additional requests for work to offset those lost due to the price sensitivity of your market.
The third thing that will happen is, because you’re making more money (net that is), you’ll be in a position to invest in new equipment and hire better employees (or retain the best you have) and further improve your market position.
In the end you may be perceived as the best, fastest, and most expensive surveyor in town. I wouldn’t think that’s all bad. Don’t be afraid to raise your prices and do less work. It might work out for the best.
What would happen if you increased rates and did less work?
What we’re really asking here is, where do you want your business to be on this chart? Of ‘Fast’, ‘Good’, and ‘Cheap’, you get to pick only two:
Life is much better being the expensive option, but you’ll need to provide the service to match.
Think about who you want your client to be and what they care about. This will help you to figure out what service you are actually providing and how to position your business compared to others.
- Clients who care most about price are probably the least preferable and would be weeded out by raising prices. Maybe let someone else serve these people. These are usually the most annoying jobs anyway.
- Most clients won’t know or care about the quality of a survey. A base level of quality and competence are already a given.
- A good client may value timely delivery, and would probably pay a premium for this. If you are chasing less work, you would be in a better position to get a survey done in 2 weeks, instead of 6 weeks like the other companies.
- Sometimes all people want is good service, i.e., there’s a friendly human to pick up the phone and your communication is timely and helpful.
- We live in an age of declining customer service and low-quality support by companies who don’t care anymore. These days when I’m looking for a product or service, my main concern is that I can get support from an actual human when I need it, and I’ll gladly pay the premium for this. Your customers will too, if you make these people your customers.