To Fee or Not to Fee? That is the question.
Do customers only want cheap and cheerful or do they secretly crave offensively huge value?
All things being equal, people will always gravitate to the lowest price. All things not being equal, if people ONLY sought the lowest price, everyone in America would drive a Chevy Spark for $14,095. Enter, your perfectly fair competitive advantage, stage left.
In economics, the general rule of thumb is, the more you charge, the smaller the net you cast. For instance, offering a free in-home diagnostic is a low barrier to entry and will entice many prospects, whereas charging a reasonable diagnostic fee will filter out a subsection of your potential prospects by creating a higher barrier to entry (Figure 1).
Now, if your competitor runs an aggressive advertising campaign waxing on about their “free in-home diagnostic”, they will diminish your pre-existing value proposition, with at least some of your potential clients being cannibalized in the act (Figure 2).
But what if you introduced a reasonably priced in-home diagnostic fee? Would you see a marked drop in demand?
Yes. Yes, you would…but… and that’s a big but.
If you were to stack tremendous value into your diagnostic fee, you will influence demand far in excess of offering a free service. This is your perfectly fair competitive advantage (Figure 2).
For example, you choose to offer the following value stack with your $75 in-home diagnostic:
100% satisfaction guarantee or the diagnostic fee is free.
On time, every time, or the diagnostic fee is free.
Guaranteed no sales pitches, just fixes.
A thorough diagnostic and repair, not an eyeball and highball sales pitch.
A 94.3% chance we’ll fit it on the first visit.
We remove the debris, or our trip is free with our outdoor coil clean quicky.
A one year no-risk guarantee on today’s service fee if anything breaks on your HVAC.
A one year, no-risk guarantee on today’s service fee if you want to replace your HVAC.
Not only would you attract a much different type of client, you are starting the relationship off with a powerful trust play. Will you lose some demand calls? Yes. Will the calls you do book give your Technician a much higher probability of bearing fruit? Yes. Yes, it would. Would you be clamoring around trying to battle it out with every Chuck in a Truck? No. No, you would not. Could you offer a free diagnostic fee for every new club member as a part of an in-home upsell sales strategy? Why yes. Yes, you could. Would that make it monumentally easier for your Service Tech to present options that your customers could more easily say yes to? Indeedly-doodly, neighborino.
When you’ve come to terms with the cost of acquiring a new client, you can enthusiastically put your newly minted diagnostic fee on the line, every time. This will present an aesthetic of abundance, health, and wealth. You’ll appear outwardly confident and trustworthy, making your business sexy…aspirational…
You can always deliver the BEST buying experience
when you start somewhere ABOVE free.
Your time and resources cost money and already have a perceived value. Leverage that value in your messaging to establish your perfectly fair competitive advantage. Or, play it safe and be cheap and cheerful, like everybody else. Exit, stage right.
Now here’s the rub. You can create your own perfectly fair competitive advantage by offering something your competitors refuse to do. Morris Jenkins has technicians on standby until midnight. Kessler Diamonds offers a lifetime risk-free replacement guarantee, even if you lose your center diamond!
What bold, badass idea will you come up with to give yourself a perfectly fair competitive advantage?
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