One of the most challenging things about owning a business is setting prices. If you sold a tangible product, you might consider a typical markup to base your pricing structure on. But when your product is a service, such as home inspection, things get a little more complicated.
Too many home inspectors worry about setting prices. Are they too high? Not high enough? And how would either of those scenarios affect the business? It’s a reasonable concern. But you shouldn’t allow that to influence your fees in a way that hurts your business.
Fear Drives Rate Freezes
You know what it takes to run your business, and you probably have a good idea about what the going rates are in your working area. Setting your rates, or choosing not to raise them, comes down to fear, according to home inspector, Barry Stone, at the Daily Herald.
There’s the fear of being lowballed out of business by hyper-competitive inspectors, and also the fear that some customers will simply walk away. Either of those situations could happen. But if you undervalue your service, you’re only hurting your own business.
Making up the Difference Could Spell Trouble
According to Stone, who goes by The House Detective, many inspectors keep their rates low and try to make up the difference with a packed schedule. Instead of two inspections in a day, maybe you’ll try to take on three or more. But if you’re not comfortable with that pace, something bad is likely to happen.
An overworked inspector is more apt to make mistakes, overlook defects, write incomplete reports, and generally perform in a way that he wouldn’t given enough time. This can lead to more complaints and possibly a claim against your E & O insurance. A low rate and an overworked schedule might work well for a while, but it could be financially devastating for your business in the long run.
Some Customers will Always Balk
The truth is, some customers will always look for the cheaper price someplace else. Without understanding just what’s on the line with a home inspection, a prospective buyer might think that one is as good as another. You can’t control that, but you can control your integrity.
A good home inspector with reasonable rates, not too cheap and not too high, will always turn away a few customers. It’s just a matter of numbers. But that same inspector will also build a reputation for inspections well done. In the long run, that is what builds your business. Develop a reputation for accuracy and professionalism, and the right referrals and customers will come.
Pricing is never an easy job. As you make professional connections in the industry, you’ll learn about the going rates as well as typical workloads. The important thing is not to undervalue your work. If you place a price on your expertise that says you’re not as valuable as some others in the industry, your customers will come to believe it.
Learning the ins and outs of the home inspection business takes education, and it also takes time and experience. We can help with the education part. Enroll now with ICA School, and you’ll learn how to perform inspections and also how to run a profitable business that grows.