Ellen Rohr
Contributing Writer
Bare Bones Biz

Service Agreements can be a great way to help develop a life-long relationship with your customers.  And they can also be a ticket to wasted time and energy.  Read the following article to help you get priced right.  Then, if you choose to offer Service Agreements at less than a profitable price, create systems that will help you capitalize on the sales opportunities presented during the Service Agreement call:  Use a survey, ask good questions and listen, offer appropriate upgrades…and be quiet long enough to get a YES!

You want to make more sales and more money.  Good for you.  And it’s good business.

Here’s the problem.  More sales at a losing selling price is like cliff diving into Lake Powell.  You might not hit bottom, but you might.  It’s going to hurt if you don’t know what’s below.

If you don’t know how much you need to charge, you can be tempted to lower your price.  If you aren’t sure where the bottom of the lake is, you may risk it.  If you do know, then you can confidently walk away from a sale if it’s going to cost you to make that sale.

Once upon a time I learned a great secret about making money in this business.  Here it is…

You’ve got to charge more than it costs.

Do you run accurate financial reports every week?  Great.  Then you know your costs and you know if you are making money.  Or, are you cliff diving…at night…hoping there is enough in the checking account to cover this week’s bills?  Maybe you know you should keep better track of the money, but you keep putting it off because you are…

Too busy?

Afraid?

Financially illiterate?

…or all of the above?

Get over it.  It’s time to clean up the “slinky-knot” mess you may have made of your accounting program.  As the owner, you’ve got to know because it’s your money.

Get the financial reports current and accurate.  Then, crunch the numbers. Put a simple Budget together.  Add up your costs of doing business and then come up with a top line Sales goal that covers your costs and leaves you with a profit.  How much profit is up to you.  (Isn’t it nice to be the boss?)  Use a pencil and a columnar pad, or a simple Budgeting program.

Now, if you are just guessing at your costs, you won’t have a clue as to how much you need to charge.  You could be swayed by your knuckleheaded competitors who haven’t crunched the numbers either.  You might be tempted to try and match their price.  (Really…how do you know that they are making any money?)

If you are priced properly, you are probably going to be the high priced provider of your goods and services.  You’ll be in good company.  Notice where most market leaders are positioned when it comes to their pricing.  Starbucks, Coppertone, Merry Maids, Band-aids, Charmin…these winning businesses leverage the value of their products and services and skip selling on price.

Put a Budget together.  Come up with a winning selling strategy and goals for Sales and Expenses.  Now, you’ve got a good game to play.  Sell enough at the right price and hit your Sales and Profit goals.  That’s how you win.

If you are selling at the right price, here’s something you’ll discover:

Your customers don’t want or need what you sell at your price.

If they did, they wouldn’t need you.  That’s why there are no commission sales people at Walmart.  People need and want that crap at that price.

Ever get a price objection?  “Oh, I would love that crap you are selling if it were only less expensive.”  People talk about price because they don’t see the value at that price.  The coward’s way to a sale?  Lower the price.

But not you.  Be willing to charge more than it costs. You are a sales professional.  Help people solve problems.  Sell value and love and friendship.  More sales at the right price = lots of money.