Tuesday, February 2, 2010

Of cows and milk

I was recently talking with a client who has a piano tuning business. Q: How is the piano tuning business? A: it is flat. (Sorry!)

Anyway, he had just finished doing a very minor adjustment to a piano he had tuned the previous summer. So it was an account he already had. The issue is whether to charge the church for 20 minutes of work, or just tell them thanks and hope they do another piano tuning this next summer? In a service business - is your time always something you charge for?

On the 'always charge' side, support includes:
  • there are costs of time and effort getting to the client;
  • your knowledge is what makes the job easy/short, so why should you discount it;
  • if a client gets used to you fixing things for free, they won't pay later for larger items (or 'forget' your free service).

On the 'sometimes not charge' side, support includes:
  • if you nickel and dime them, they are more likely not to call on something small - then when the big expense hits, they will balk at your cost;
  • there is a perception, unfair though it is, that if it takes you 5 minutes to solve something, it should not cost or cost very little;
  • service businesses are run on repeat business and so you take care of them to keep them long term;
  • it costs more to gain a new account than keep a current one happy.
Both have their merits.

I lean towards not charging someone for small services. If they expect to be charged, and you don't, their surprise might just jar them into recommending you! Give them an invoice for what the work would be, and mark 'PAID: thanks for your continued support!' on it. I want them to think of me whenever they think of the service I offer. Think of a person whose heater needs a minor service and the cost of a service call will be difficult to handle (we've all been there) - and you all say no charge.

If you don't charge, put it down as a marketing expense and track it - be sure you are not giving away too much. You won't be any help if you are out of business.

That said, some services are irregular and you might not see the same customer ever or rarely. In those cases, a middle road might be to charge a nominal amount for quick jobs - $10 for 10 minutes up to 30 minutes, then standard hourly rate.

Be clear on how your business operates and you will come to a decision you can feel good about.

The title of the post refers to the old adage about you can't sell a cow if you give the milk away for free.

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