Getting your pricing right can be a constant battle for contractors in the trades, especially when faced with rising vendor costs, inflation, fluctuating material costs, and more. You need to keep your prices competitive, while also protecting your profit margins.
Rather than engaging in a pricing war with “Bob the Plumber” down the street, however, wouldn’t it be simpler to use a software solution to automatically update your prices whenever you deem necessary—and without pricing your company out of the market or hurting your bottom line?
Introducing ServiceTitan’s Price Insights, a new product available to users of Pricebook Pro. Price Insights essentially taps into all of the data contained within Pricebook Pro to calculate the average price for each service, then shows you how your price for a particular service compares to others in your region.
In a recent ServiceTitan webinar, product experts walk us through how regional average pricing works and how you can use it to protect your margins and stay competitive. Also, Laura Thornton, President and CEO of TNT Home Services, shares how she’s using Price Insights to more efficiently implement pricing changes after signing on as a beta user for the new product.
To use Price Insights, companies must be users of Pricebook Pro, which is currently available for the HVAC, plumbing, electrical, water treatment, drain, sewer, indoor air quality, and duct services trades.
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What is Pricing Builder, Pricebook Pro, and Price Insights?
Before getting into the nuts and bolts of the webinar, ServiceTitan Senior Content Marketing Manager Jackie Aubel provided a glossary of terms to keep everyone speaking the same “pricing” language.
Pricing Builder is a core feature available to all ServiceTitan users that helps contractors save time–and meet profit margins–by automating pricebook maintenance. Pricing Builder gives you the capability to set dynamic pricing for residential flat-rate businesses or client-specific pricing for commercial businesses.
Pricebook Pro, an add-on to ServiceTitan field management software, is the only integrated flat rate solution that simplifies pricebook management, saves time, and provides peace of mind to owners looking to protect their margins and get the most out of every job.
With Pricebook Pro, you receive ongoing updates to product pricing, marketing descriptions and images, adjustments to sold hours, and even upgrades and recommendations. You also receive a pre-populated pricebook that you can customize to your business.
Price Insights, available only to Pricebook Pro users, calculates the average price for each Pricebook Pro service, then shows you how your price stacks up to the average selling price for that service in your region.
Price Insights also features a meter that reflects the level of confidence in ServiceTitan’s algorithm so you can feel secure knowing you've made the wisest pricing decisions for your business.
How do you protect your margins and stay competitive at the same time?
With vendor and material pricing fluctuating more than ever and supply chain issues causing constant delays, contractors must update their pricebooks continuously to keep their profit margins in check and avoid losing money on jobs.
Thornton, who runs the multi-trade TNT Home Services in Colorado with her husband, Ronnie, says she tried a different comparison pricing tool in 2019 before the pandemic hit, but decided she wasted her money because everything changed a short time later.
“Then 2020 hit, and all the materials started changing. Some were changing day to day, or week to week. And everything we had paid for was extinct, it wasn't even accurate anymore,” Thornton explains. “And not only that, but it was sent through a spreadsheet, so we had to manually put everything in. There was nothing automated about that system. It was very clunky.”
TNT Home Services became a ServiceTitan user in 2021, and Thornton agreed to beta test the new Price Insights tool a few months ago. And unlike her gas-station neighbors in Firestone, Colorado, who constantly wage gas wars with each other to attract more customers, Thornton says she no longer needs to play that silly game. “Price Insights gives us the opportunity to remain competitive without having to constantly go out and do a survey, because this data is updated every day,” Thornton says.
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With the click of the Price Insights button, Thornton can put in a price for TNT’s HVAC, plumbing, or electrical services, and see how that price compares to other companies in her region.
“We're in an area that has a lot of competition,” she says. “My pricing strategy this quarter may very well be different from my pricing strategy next quarter.”
Case in point: Last year, TNT opened up a new service line for electrical services, and offered a low-price introductory rate for new customers to gain attention and grab initial market share. As the company established a more loyal electrical customer base, the pricing went up.
“For us, we never ever want to price ourselves out of the market. So, we have to pay very close attention to make sure we’re in the middle. I like to be a little bit on the higher end of the middle,” Thornton says. “If we need a little boost and maybe need to lower the price for something this quarter, we can do that.
“With Pricebook Pro and Price Insights, you can do it by individual item and service. You don't have to be all or nothing in your pricebook,” she adds.
Aubel says all of the data used to calculate Price Insights is updated daily, so it’s real-time data from real ServiceTitan users, and it’s also privatized to protect the security of all customers.
“So, Laura, you now have this tool that allows you to, with confidence depending on where that scale is, make changes to your service price and protect your margins. How often do you actually go in and adjust your pricing strategy?” Aubel asks.
In the beginning, Thornton says she tended to want to “go down the rabbit hole” and see what everybody is charging for everything. But then she learned she could pull a report in ServiceTitan that shows her what tasks, materials, or equipment were used most frequently at TNT Home Services.
“Every quarter, I'll go in and update maybe the 150 top items in each service line,” Thornton explains. “It's very, very quick to do it. But it is easy to go down a rabbit hole if you decide that you want to mess with every single item in your pricebook.”
So, be intentional about what prices you want to update, encourage a quarterly review of everything, but spot-check your top services, Aubel says.
“And I think you have to look at your supply and demand, too,” Thornton says. “We have to be really sensitive and aware of the prices that we're being charged, because no matter what the Price Insights say, if it's going to put us below our margins that we're hitting based off of the price we're being charged for our equipment or our labor costs, it doesn't make sense. So, you have to go in and do a spot check.”
What does “regional average” mean?
Wing Lam, ServiceTitan Principal Product Manager, walked through a short demo of Price Insights and explained some of its terms.
“We built a pretty simple product, and we intended it to be that way so you can get as much information as possible without it being too complicated,” Lam says.
With Price Insights, you have your pricing set in your Pricebook Pro, and you can see a field called “regional average” powered by Titan Intelligence. Once you click “regional average,” you will see the average price for that service in your region and also the price you have set. Then, you can adjust up or down.
“Region,” however, is not an exact zone, Lam says. Rather, it’s more of a sampling of prices in your area.
“We don't want to expose pricing, and we want to be as accurate as possible,” Lam says. ”What we do is, we figure out for each of those services who those customer bases are, and we find similar shops that serve the same customer. If we do not get a safe enough sample size, we actually expand out until we hit that minimum, making sure that it’s accurate and also private.”
The confidence meter, on the other hand, is based on a mathematical formula that looks at specific prices for specific services from a variety of companies, Lam says.
“So the more concentrated it is, the more confident we feel. But if it's all over the place, we're going to let you know that we're not that confident [in that price],” she adds.
Just keep in mind that the intent for Price Insights is not to tell you how to set your prices.
“Every shop is unique, and your expenses are going to be different, so it's critical that you understand your expenses and your margin. But hopefully this feature will give you insights to price confidently,” Lam says.
>>Now that you’ve seen Price Insights for Pricebook Pro, you might be curious to see what else is included. Check out the product tour!
Did you know? Customers who switched to Pricebook Pro saw:
13% increase in Revenue
4% increase in Close Rate
4% increase in Ticket Size
“Pricebook Pro and Price Insights help with competitiveness, it helps with our margins. We can raise and lower the pricing. It's a very, very useful feature,” says Thornton.
ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.