How to Beat Lower-Priced Competitors

Home service businesses can rarely afford to play the price-slashing game—but there are options for shops looking to one-up cheaper rivals.

“Why is your estimate so much higher than these other companies?”

It’s a question service businesses dread getting but almost always, inevitably, have to answer. Whether you run an HVAC, plumbing, electrical, or another type of home service shop, you are unlikely to be the only company in your zip code vying for homeowners’ attention. And one of the most effective ways to still make a splash in a new marketplace? Offering the lowest prices possible.

Fortunately, there are a number of different ways for home service companies to compete with lower-priced competitors without spiraling down a pricing war that will hurt your profit margins. Let’s take a look…

Become the Experts

It's easy to become so focused on calculating inventory, marketing campaigns, maintenance agreement terms, seasonal deals, and other numbers, that we forget that one of the most compelling things we can offer from our business is ourselves.

"Focus on the ways you’re ahead of your competitors in terms of quality," Simon Casuto of the Young Entrepreneur Council told Small Business Trends. "Clients care about price, but they care more about the quality of what they’re getting for their money."

So what is it about your company that sets your business apart? A foundational set of principles? A commitment to spotless service? Uncommon expertise in your field? Whatever it is, make sure that it is a known factor to customers and at the forefront of your brand. For instance, shops often invest in ongoing training and certifications for their team. Are those achievements on your website? Shared on social media? Mentioned in your marketing campaigns?

You already know that not all every home service professional is cut from the same cloth. If your potential customers know that too, the more likely they are to see added value in your services—not just a higher price tag.

Focus on Convenience

There will always be some customers whose make-or-break factor is price. However, recent consumer trends indicate that that price point isn't the deal-breaker it used to be.

For instance, in 2018, Thrive Analytics found that 30% of satisfied customers were willing to switch service providers if they knew that competing provider was__ more convenient__ to deal with. If you’ve ever used megapopular on-demand services like Amazon, Netflix, Spotify, or Uber, your own household is probably contributing to similar trends.

But what does that mean for the home services? What can plumbers and electricians do to offer more convenience to homeowners when they’re already coming to their property to fix problems onsite? Well, quite a lot, actually. Consider the following:

• Can homeowners text your office with questions? Can you text back with answers?

• Do homeowners know where your truck is on the road before an appointment?

• Are your customers sent a technician bio so they know who to expect at their appointment?

• Can your team offer a sales and checkout experience that emulates online shopping?

• Do your technicians offer on-the-spot financing? Point-of-sale credit card processing? These are the kind of convenient service perks that other types of industries are offering customers and, in turn, elevating consumer expectations. The good news is that, with the right tools, it’s possible for home service shops to offer these features to homeowners—and immediately distinguish themselves from much of the (cheaper) competition.

Revamp Your Marketing

It used to be that marketing a home service shop meant taking out a listing in the local yellow pages, maybe purchasing a billboard for a season or two, and calling it a day. Not so, anymore. Nowadays, consumers expect more from the services they purchase, including a more personalized touch.

What does that mean for your marketing? Well, when it comes to maintaining your current pool of customers (retention marketing), it probably means mining customer information.

It’s not uncommon for home service businesses to leverage customer data points on:

• Maintenance agreement status

• Condition of existing/aging equipment

• Make and model of installed equipment

• Warranty information on installed equipment

• Status of regularly replaced equipment (AC filters, water filters, etc.) In some cases, shops are even vigilant for new homeowners that are moving into their service area and help welcome them to the neighborhood with a timely email or text. Whatever the homeowner’s needs may be, leveraging customer information is a way to stay personal with your marketing—and anticipate homeowner needs before they go looking at your competitors.

Know What You’re Charging For

While studying your competition’s price slashing and wondering what they have customers actually paying for, remember that, in some cases, suspicious homeowners may be wondering the same thing. There’s value in being upfront with customers about prices and transparent about what they’d actually be paying for if they hire you.

The first step in offering this transparency is making sure that you’ve appropriately priced (and continue to accurately update) your services. This means leveraging a modern pricebook that allows you to easily calculate sold hours, average material costs, and other critical numbers that make up your billable services.

Once your pricebook finely tuned, you can build and present estimates with confidence. With easy-to-read, itemized estimates, homeowners can see exactly what they’re paying for—which offers the kind of consumer trust and peace of mind that the dramatically discounted, mysteriously bundled services from your competitors just can’t keep up with.