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Structured pricing vs. “winging” it?

  • 18 July 2024
  • 5 replies
  • 168 views

How many of you guys use a pricing structure to generate quotes?
 

At the moment I kind of pull a number out of my butt and see if it sticks. It’s an educated guess of the high end of the range I think I can get without too much price pushback, but it delivers inconsistent results. I am working on a solid price structure that I use consistently, but I’m trying to make sure I cover my bases without being overly complex. 
 

Pro’s and cons- Winging it lets me experiment with pricing on the fly based on the conversation I am having with the customer. Structured pricing would let me delegate the quoting function, or not have to put much mental energy into it (maybe AI can do it for me if I have the right guardrails…). 
 

What do you guys think? If you were building a pricing structure for the first time (or again) what elements would you include in the structure? 

5 replies

Pool Man Mike
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Userlevel 4
Badge +5

We typically use structured pricing which for the most part is our standard pricing however, we will raise it higher depending on how busy we are at that moment. 

FPaSS
Rank

We use a lot of different factors to determine pricing, first and for most… What service is it? i.e. repair, service for a new client, service for an existing client who’s added a new body of water… We’ll go with new client service for this example.

First is it a residence, a short term rental (Air B&B), or a commercial property (Hotel/Motel)? Next I factor distance from the home base. Then how much chemicals will be used in a worst case scenario... Cl is 0ppm, pH is 8.2, how much I weekly maintenance algicide it will use, and my time that it will take at the property to clean the body of water.

 

example: 40,000 Gallon pool 20 miles from home base. I want the Free Cl to be 5.0 ppm and the pH to be 7.4.

My truck costs me in gas and maintenance $.60/mile

12.5% Cl Bleach costs me $.80/oz

34.6% Baume Muriatic acid costs me $.22/oz

Algicide costs me $.03/oz

I get paid $3.00/minute for regular service

Add $10 for a short term rental and $15 for a commercial property.

 

So using those numbers and the formula, it would look like this.

 

(20 miles x $.60 = $12.00)

0 to 5 ppm takes 199oz (199oz Cl x $.80 = $159.20)

8.2 to 7.4 takes 42 oz (42oz x $.22 = $9.24)

the weekly maintenance dose for algicide is 7oz (7oz x $.03 = $.21)

I can vacuum the whole pool in 3 minutes (3 min x $3.00 = $9.00)

So after totaling it up: (12.00+159.20+9.24+.21+9.00=189.65)

That’s $189.65 per service so I would round to the nearest dollar making it $190.00 per service. I never give a quote on the fly I always make my calculations before I talk money. Of course these figures are completely made up but as an example it shows a good way to make a price list and a solid estimate.

If you have to use extra chemicals like soda ash, SBC, Calcium Chloride, and so forth you can charge per use as long as you've let it be know to the customer that that was the case.

Happy Pools
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Userlevel 2
Badge +1

We use a lot of different factors to determine pricing, first and for most… What service is it? i.e. repair, service for a new client, service for an existing client who’s added a new body of water… We’ll go with new client service for this example.

First is it a residence, a short term rental (Air B&B), or a commercial property (Hotel/Motel)? Next I factor distance from the home base. Then how much chemicals will be used in a worst case scenario... Cl is 0ppm, pH is 8.2, how much I weekly maintenance algicide it will use, and my time that it will take at the property to clean the body of water.

 

example: 40,000 Gallon pool 20 miles from home base. I want the Free Cl to be 5.0 ppm and the pH to be 7.4.

My truck costs me in gas and maintenance $.60/mile

12.5% Cl Bleach costs me $.80/oz

34.6% Baume Muriatic acid costs me $.22/oz

Algicide costs me $.03/oz

I get paid $3.00/minute for regular service

Add $10 for a short term rental and $15 for a commercial property.

 

So using those numbers and the formula, it would look like this.

 

(20 miles x $.60 = $12.00)

0 to 5 ppm takes 199oz (199oz Cl x $.80 = $159.20)

8.2 to 7.4 takes 42 oz (42oz x $.22 = $9.24)

the weekly maintenance dose for algicide is 7oz (7oz x $.03 = $.21)

I can vacuum the whole pool in 3 minutes (3 min x $3.00 = $9.00)

So after totaling it up: (12.00+159.20+9.24+.21+9.00=189.65)

That’s $189.65 per service so I would round to the nearest dollar making it $190.00 per service. I never give a quote on the fly I always make my calculations before I talk money. Of course these figures are completely made up but as an example it shows a good way to make a price list and a solid estimate.

If you have to use extra chemicals like soda ash, SBC, Calcium Chloride, and so forth you can charge per use as long as you've let it be know to the customer that that was the case.

Thanks for the SUPER detailed response! I love to see this! 

This makes a lot of sense, but I don’t see a “profit” number in there, or a “base charge”. I guess you are making your profit by taking less than actually 20 miles to get there when it fits in to the route, and some markup on the chems? 

Thanks again for putting so much thought into the response! 

Rich O'Neill - Happy Pools - Jacksonville FL
PoolMe Europe
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I would check the market in the area, the competition and so forth, the more information you have the better your pricing will be, this business is not based on one time profit, it's a non ending service with long term solid income so make sure you search the internet for pricing info and adjust yourself in-between, best regards

MicahShaw
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Userlevel 2
Badge +2

I’ve done both.

Generally the ‘wing it’ price is given for an issue that needs to be addressed pretty quickly and I have the customer’s attention. It always comes with a range rather than a solid number and it is based on experience. This always gives me a buffer in case I have overlooked something.  My method is to shoot high - it’s hard to get more after the initial conversation, but you become the hero if you can stay at the lower side of the price (and still make profit of course)

Any estimate generated includes all our raw costs (parts, labor, travel) + overhead & administrative costs. Once those are figured, I use a multiplier to add profit. The multiplier varies based primarily on costs - generally, the lower the cost the higher the multiplier.  The final step in my process is to add a small % increase to the price to be used for a commission for the repair tech. 

The only exception to this model is a service call that will take one hour or less - in this case we have a preset charge which captures labor, travel & overhead + materials (w/ markup). 

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