How you price your detailing services can be stressful, especially when you are just getting started. And even established detailers struggle with adjusting or raising their prices when they have an established customer base. Here are four pointers to put yourself in the sweet spot with your prices for your detailing services.
Tip #1: Understand what your hourly rate is
One thing that separates new detailers from established ones is knowing what they truly are making per detail. It is easy, especially when you are first getting started, to book a detail for $300, spend a majority of the day working on it and be content. Imagine that detail took someone 6 hours. They might easily say they made $50 an hour, right? Wrong. They charged the customer $50 an hour. What was not factored in was all the expenses and overhead that are involved with every detail. Let’s break it down further and lets assume you are operating out of small shop that costs $1200 per month, utilities included.
Estimate Your Expenses
Here is a quick rundown of some of the things you need to factor in to that $300 you just made from that customer, and it begins before the detail.
- You spent a half-hour talking to the customer on the phone when he first contacted you
- You were proactive in getting the shop ready for the detail before he showed up, 25 minutes
- When he dropped the car off, he pointed out a few areas that he wanted you to spend some extra attention on, 15 minutes
- You used approximately $25 in products that you’ll have to replenish in the near future
- Rent and utilities costs you $40 per day
- The customer paid via credit card and you lost 3.25% to processing fees
- When he picked the car up, you chatted for another 15 minutes showing him the car
- It took you an additional 20 minutes to clean up the shop
- You have insurance for your detailing business that costs you $90 per month or $3 per day
- You have a pile of towels you now need to wash…
There is even more to it than that, but hopefully you get the idea.
Calculate the true time spent on the detail
In this scenario, the total time spent actually detailing the car was 6 hours. The amount of time spent with the customer was an additional 1-hour. Setup and cleanup maybe took you another hour after you washed the towels. That is now 8 hours of your time invested in that particular detail.
Factor in your fixed and variable costs
Rent, insurance, utilities, products, credit card fees, and office supplies are just some of the things you want to keep in mind when calculating all of the expenses that go into a detail. In this instance, lets just approximate what those costs were: $25 in product, $40 in rent and utilities, $9.75 in processing fees, and $3 in insurance. That comes to $77.75 in expenses.
Estimate your actual hourly rate
So let’s do the math. You took in $300 and there were $77.75 in direct expenses for the day. That leaves you with $222.25. You spent a total of 8 hours securing the detail, working on it, presenting it to the customer and building a relationship, and clean up after the detail. $222.26 divided by 8 hours is $27.78 per hour. Say on average, you work 5 days a week and 50 weeks of the year. Now if you want to make $55,000 a year, then maybe this is an ok rate to charge given this scenario. If you knew that you personally wanted to make $80,000 per year as a one man shop, then for that same detail that cost $300, you would need to charge approximately $400 in this made up scenario.
Don’t forget about taxes
Unless you are operating a 100% cash business and are trying to screw over the government, you will need to factor in taxes. Keep this in mind so you don’t regret it come April 15th.
Bottom line: Understand what you are actually making per hour and make sure your pricing aligns with your income goals and the level of service you are offering.
Tip #2: Use a 3-tier pricing model to your advantage
We recommend using a 3-tier pricing model for your main services, particularly your interior and exterior services. The service you want to sell the most of should be your middle service offering. Your lowest price should be the minimum amount you feel comfortable performing the service on a vehicle. And the third service should be an exclusive service that is between two to three times more expensive than your middle price. Here’s a quick example using generic names for the services:
- Interior Detail – $100
- Better Interior Detail – $200
- Best Interior Detail – $400
When a potential customer looks at those services, you want them to go through the following progression. Scan down to the Interior Detail for $100. OK, I can afford this, I will keep reading. Scan down to the Better Interior Detail for $200. This has some additional benefits that I know I want for my car, but I’m not sure I want to pay $200. Scan down to the Best Interior Detail for $400. Wow, this detailer really knows what he’s doing, but I don’t need this level of care for my vehicle. I know I want more than the cheapest option for my car, and $200 does not seem too bad after seeing a service for $400. Most people will go for the $200 Better Interior Detail if you sell it properly.
Pay attention to how you position and sell your services online or when you are talking to a customer. Look at how automotive manufacturers sell their options. They almost always get you to upgrade to that next package by including one feature everyone wants in the next tier. There are a few people who want every bell and whistle, and most never get the most stripped down version, so use that to your advantage when you are thinking about what to include in each of your services.
Tip #3: Never commit to a price without seeing the vehicle
One of the most common mistakes detailers make is listing their services and prices and sticking to them as if they are carved in stone. Always, always, always list your prices by saying “Starting at…”. Until you see the vehicle and personally inspect it, you should never commit to a price. Many times a customer will say their car is in good shape when it’s really a mess. Or that they wash it regularly, and maybe they do, but it is with a broom and Dawn detergent in direct sunlight. Not committing to a price over the phone or on your website also allows a better chance for up-selling them. If a customer has already made up their mind that they were going to spend $150 on an exterior detail, the chances of you convincing them to spend $400 when their car really needs some polish goes down significantly.
Tip #4: Never compete on price with local competitors
If you try to undercut the competition in detailing, you won’t last long. You will burn yourself out and will never make that much money. This is honestly what gives the industry a bad name. People claim that they will buff out an entire car and include everything under the sun in an hour and a half for $80. If you try to compete with typical car wash detailing services or fly by night detailers, you will fail. Instead, price your services at a rate that you want to make. Get comfortable with people turning you down, but also get comfortable with educating your potential clients, so that more of them say yes. If someone understands why your services cost more, they are more likely to spend their hard earned money with you, especially if it’s a car they love.
When it comes to determining the actual amount for your services, we highly recommend doing competitor research. Call them up, experience their sales process on the phone. Take note of what they do, what they don’t do, what products they use, what tools they use, what their closing hook is, everything. Then as you come up with your service offerings, build in things that differentiate you from your competitors, or be ready to educate them on why they want to choose you over your competitor. The more you know about your competition, the more likely you will close sales from new potential customers shopping around. This is something we help detailers we work with do when we advise them on their service pricing. Sound like something you could benefit from? Get started!