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Undercutting Competition: What To Do When A Competitor Undercuts Your Pricing?

Undercutting Competition: What To Do When A Competitor Undercuts Your Pricing?

Undercutting Competition: What To Do When A Competitor Undercuts Your Pricing?

Posted by Jarrod Miller-Dean

Housecall Pro

Uploaded 126 days ago

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What Can You Do When A Competitor Undercuts Your Pricing?

Home services is a competitive industry, and one of the most frustrating aspects of competition is seeing your services offered for a discounted rate. You offer a valuable service, built on years of expertise, skills and training. You know what your time is worth, so seeing a competitor ad at a price that reduces profits and undermines the value of what you offer can leave you feeling worried about what to do.

Jennifer Byrne: 
Rising Star July 178 at 3:28 PM

How do you guys deal with competition undercutting you? Do I have to go cheap in the beginning and slowly raise my prices to a sustainable level?

Nevin Guiser: Everybody is cheaper than me...Offer an outstanding 5-star service and separate yourself from the heard.

Should You Decrease Your Service Prices?

The general consensus among our members is to not drop your prices and enter into a price war. Not only does it devalue what you offer, it is not a long term business model.

Jennifer Byrne: I don‘t like the idea of people going around in topping off units all of the time, so it all just goes and leaks out. 

John Wilcox: I’ve had many people tell me that I was the highest bidder after they hired me. I ask them why and they respond by telling me, I knew what I was talking about. I make them feel I was quality. 

Jennifer Byrne: But for those rates, I would expect that someone's looking for other problems in this time of year, so hopefully it will lead to some good leads. Anibal Tafoya: Stick to your core values. I never hire the cheapest guy. People will pay more for a 5-star service. The people you charge less will cost you more because they will nitpick you to death. Choose your clients through pricing, don’t do work just to get the job. There is a reason that a wealthy man chooses a higher-priced hotel, car and so on. He is wanting better, dependable and reliable service. 

Jennifer Byrne: I’m starting to realize that I’m going to have to drop my rates to get my foot in the door. 

Douglas J Wilkins: Jennifer Byrne Don’t lower your rates. Have some “specials” some people will hire base on 5-star expensive services and some people will hire passed on cost. 

Justin McKerrow: Just keep your head up, feel confident in yourself and people will recognize that! You don’t want the cheap customer base, they complain the most.

Delivering quality services and taking care of your customers is often what matters most. While there are homeowners looking for the lowest price service, they may not be right for you. Customers searching for price over value will not be lifetime customers. 

You Get What You Pay For 

You have probably heard it before and even said a few times, You get what you pay for. How many times have you arrived to a service call to find another contractor has caused more issues or provided a subpar repair? Educating your customers throughout the process is the best way to help them see the value you are offering, regardless of cost.

John Stoess: Educate your customers. Adding refrigerant, regardless of price doesn’t fix the problem. Explain that there is an underlying issue that needs to be fixed (a leak) and that you don’t want them to pay to add refrigerant every year. 

Matt Smith: An old mentor once told me, “If you think I’m expensive, wait till you hire the guy who doesn’t know what he’s doing.” If you’re not the cheapest, be the best. If the customer wants the cheapest, he’s not the right customer for you.

Part of your branding and marketing should always focus on your core values and unique selling points. If you are focused on price, it will always be a race to the bottom. 

Tracy Butcher: We get told regularly and that we don’t charge enough and that we are way overpriced….yet here we are booking a month out (keeping some openings for emergencies, etc.). Our goal is to keep our 4 employees working full-time. Make your process what you need to stay as busy as you want to earn the profit that is your goal, and don't worry about competitors' prices. 

Alan Rush: No one wins in a race to the bottom, including most importantly the customer. Value, customer experience, and the process will overcome price. If you are simply selling products and services for a price, you will get need and price objections. Focus on the solution, solving the customer's problem and taking them from their current state to their desired future.

Final Thoughts

Focus on great customer service and a quality product. Educate your customers on the services you provide and how you are helping them long term. Offering specials or small discounts for customers is not a bad thing, but make sure you are not eating away at your profits at the cost of winning a customer. Being the cheapest is not synonymous with being the best. 

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