Let’s Talk About Prices

Price it is an important topic that one must come to grips with as our businesses’ success literally depends upon getting our price and making profits. We all have customers who are sensitive about prices and we all gain or lose customers over what we charge.

Many cleaners set their prices based upon competitive forces, setting what they charge based upon what their competitors around them are charging. I disagree with allowing your competitors to influence your prices because your competitor does not pay your rent, your competitor does not pay your staff, and your competitors DON’T own your business, YOU DO!

Profit is NOT a dirty word. Without profit, your business cannot survive. There is absolutely no shame in pricing for profit. But where the biggest obstacle lies is usually in the business owner’s mind. Many business owners think that if they price their services higher than their competitors, customers may end up going to the cleaner who costs less. Not necessarily so.

All price resistance boils down to three simple objections:

1) Your price is really out of their budget; the customer simply cannot afford you

2) The customer feels that there is enough value being offered in exchange for the price asked

3) The customer feels that they can get the exact same service at a cheaper price

People will pay for what they want, people will always find money to acquire what they want and need. If potential customers have completely tapped out all options and sources of money and cannot cover your asking price, there really isn’t much you can do. But hey, this is only dry cleaning; it’s not a brand new Ferrari. If someone cannot come up with a dollar or two more to cover the cost of cleaning and pressing a suit, I would say the customer has more serious problems in their life. Let’s keep it in perspective, folks will spend 5 to 8 bucks on a frappa-mocha-chino-non-fat-milk-foofoo cuppa coffee per day, so I don’t think it’s out of line to ask for something around that price or little more for cleaning and pressing a pair of pants. That cuppa coffee is consumed in ten minutes, and the caffeine rush from that cuppa lasts a little longer than that, but a well pressed suit will last all day or more.

Most people believe higher prices mean better quality, expecting increased value for their money. ‘If it costs more, it must be better.’ If you are encountering resistance from customers refusing to pay your prices, it usually means that you have failed to meet your customer’s expectations of value. Simply put, if you are falling short of your customer’s expectations, you simply are not worth what you are charging.

Yes. It really is that simple. If customers are leaving you over your prices, it’s NOT the price you are asking for; it’s the value you are (or are not) providing in return. Customers DEMAND value, and if they are not convinced that is what they are receiving, they will be gone.

Customers are willing to pay pretty much whatever price you ask, but if they can get the exact same level of service and quality someplace else for a little less money, they will switch. Please note, I said exact same level of service and quality. Today’s dry cleaning community has become commoditized, so much so that many cleaners barely make the effort to differentiate themselves from all other cleaners and simply stick the word CLEANERS over their door. Whatever happened to standing out and being proud of who you are and what you do? All too often I hear cleaners say, I put so much effort into my work, nobody cares about my customers and their clothes more than I do!’ If that was true, why is it your customers can’t recognize all the extra care and attention you are investing into your customer’s clothes? How exactly ARE you doing something different than the cleaner just down the road? If your customers perceive you as providing the exact same service without differentiating yourself from all others, it’s very easy for a customer to switch to a lower priced cleaner. But, if you are providing a noticeable difference, your customers will not be able to draw apples to apples comparisons easily, and can justify a difference in price.

Price difference for price difference sake is not enough. Pricing is all about understanding your costs, monitoring your expenses and how you manage your business. I am constantly surprised how many dry cleaners I’ve met who DO NOT get a monthly profit and loss statement, let alone look at their pieces per hour their plant generates and how much is being spent on labor to produce the work customers bring in. I was a member of a few management groups during my day as a dry cleaner, and strongly recommend joining a management group if you can. What I learned about managing my business and watching my expenses paid dividends year after year. Learning how to reduce production costs, or at least learning to understand why your costs are different than another cost group member’s numbers can give you an extreme competitive advantage. Ten cents per garment may not sound like a lot, but over the course of a year, those dimes add up. And, operating more efficiently than your competitors will give you not only a cost and profit advantage, but also keep you generating income when others may only be breaking even or running losses.

It takes confidence to watch a customer who won’t pay your prices walk away. Sometimes a customer has to experience your competition to understand the real value you are providing. And if your customer does not experience a difference, perhaps you have issues internally you need to address. All business (and customers) is earned, what are you doing to earn your piece of the pie?

About Darcy Moen

Darcy Moen opened his first drycleaning shop at the age nineteen. Over the next sixteen years, he built his first 600 square foot plant into a chain of 5 stores, creating and testing his own marketing programs along the way. Darcy is a multi-media marketer, working in digital signage, video, print, direct mail, web, email and is a social media expert certified by Facebook for Pages, Insights, and Ad systems. Please visit www.drycleanersuniversity.com

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