Top 9 Pricing Errors And How To Avoid Them?

by Mahnoor Mansur
cell-phone-repair-store-software

Pricing is an art.

It takes both skill and talent to develop a killer pricing strategy. Just like in sports, to reach mastery in pricing, you need to practice, take risks, make mistakes and learn from them.

There are a few common slip-ups that almost every repair shop makes while pricing their products and services. Trying to win a sale, salespeople usually tend to overestimate, misinterpret, exaggerate, and otherwise miss the mark.

Let’s look at a situation here.

You see a customer roaming around in your repair shop. You notice them make their way to the accessory wall. They check out the price of a few items. And you see them frown the moment their eyes hit the price tag. Then, after viewing the price tag, they hurriedly put the accessory back.

After checking a few more price tags, the customer finally comes to you. You hear them explain that the battery of their phone is not charging. So you check the device and take it in for a battery replacement through your cell phone repair store software.

While you are creating the ticket, the customer inquiries, “how much will a battery replacement cost?”

You tell them that it will cost $100 and you see the frown appear again on the customer’s face. The agitated customer asks for their device back. And leaves your repair shop mumbling something about overcharging.

That not only just cost you a sale but is also a threat to your reputation in the market.

All because of bad pricing.

Mostly, repair shops are clueless as to why their prospects are not changing into customers. It’s probably because you are committing pricing errors again and again.

WORSE, you didn’t even know that your pricing was threatening your sales until the customer mentioned above showed upfront.

To make your road to a perfect pricing strategy easier, we have a cheat sheet that will enable you to avoid the top pricing errors.

1.    Not Updating Your Prices

When was the last time you updated your prices? Was it 6 months or a year ago?

Don’t think that if things are going hunky-dory, you should rock the boat. Take into account the rising inflation and costs.

Usually, repair stores fear the uproar of changing prices and try to put it off for as long as they can. However, savvy repair stores make their customers and salespersons accustomed to recurrent price changes. 

You need to adjust to the radical changes in the market. First, recognize the value proposition of your products and service changes with the changes in the market. Then adjust your prices to reflect the changes.    

At the very least, you need to revisit your prices every year. Of course, there are plenty of reasons for you to increase or decrease your prices regularly (even daily). But the most persuasive reason is that even a 1% increase can have a significant impact on your profits.

This could increase your repair store’s profits on average by 12%. And you will be shocked to see how this tiny increase in price can bother your repair store customers. So, be prepared to justify the increase in prices and be transparent.

2.    Applying ‘One Price Fits All’ Rule  

Do you have the same pricing policy in your cell phone repair store software against all your products and services?

If that is the case, you are leaving profits on the table.

Here is an example that will reveal the significance of having different prices for different products.

Let’s say you have two types of tempered glass. You price one for $20 and the other for $22. You see that most of the people opted for the one that costs more. In this situation, the one with the lower price only emphasized and highlighted the quality of the one that costs more.

To further highlight the impact of tiered pricing, let’s take another case. You add a bargain price of tempered glass at $18. You notice that most customers opt for the $20 tempered glass, which is the middle one. Clearly, it’s a huge disaster for your profit margins.

Lastly, you remove the bargain price and add the premium tempered glass at $30. Again, you see that many customers opt for the premium option.

So simply by offering a variety of price options, you can make extra profits on each tempered glass.

3.    Believing Lower Prices Wins Sales

Many repair shops believe that if their service or product is priced lower than the competition, they will get more business. The greater the volume, the more money you make, right?

That’s not always true.

This kind of strategy only works if your products and services are precisely the same as your competitors.

Alex Marini of Computer Repair Doctor shares what repair shops should not do at all. If repair shops keep their prices very low, it will bring you down and other repair shops as well.

“You don’t want to be the bottom of the barrel in your area and bringing everybody else down and making it impossible to earn a living in this industry. But, it’s all about being fair and making sure it’s an affordable and right thing to do for yourself and your customer.”

Today’s well-informed buyers are skeptical. If something is cheap, they get suspicious and think that it’s of inferior quality. So don’t discredit your repair shop’s reputation by pricing your products and services at a bargain-basement level.

Indeed affordability is crucial, but the customer still wants value. So rather than comparing your considerably lower prices to your competition, show why you have priced low.

What does your repair shop do differently that enables you to provide quality at a reasonable price?

Once you can prove this, you will see visible benefits.

4.    Pricing Too High

Another mistake that repair shops make is that they price their products and services without considering their target customers and what their value. This is a recipe for disaster.

Denis Gutsu of First Response Phone Repair shares his pricing strategy while talking about common mistakes repair shops make. He feels that to attract customers, you need to know the market. So check out the prices your competitors are offering. Because they might be a few, who are offering quality services at a lower price than yours.

“So, my belief is that if you want to attract customers, you have to know the area that you’re in. You have to know what prices you have because right around the corner, you can have somebody that can be shutting you down slowly without you even knowing it.”

Alex Marini of Computer Repair Doctor shares his vision for pricing repairs and services. First, fix prices based on the area you are operating in. For example, if you are located in a porch area, your prices can be high. But if you are located where people don’t spend a lot of money, you need to keep your prices low to make ends meet.  

“You know, you can’t be offering five-star repair prices in a two-star neighborhood. And what we do, here is, everything that we price, you really want to keep the customer’s best interest, and we’ll let them know that. If your repair, whether it’s a phone or a computer or a Mac book, if just the economics of it are too expensive to repair it, then the device might be worth that, you know, you relate to the customer and that can really get you a customer for life.”

Timothy Phelps of the Techy franchise shares another school of thought. He follows a fixed pricing strategy in all his repair stores and franchises.

“There’s a guideline that we follow. Doesn’t matter when the price goes up and down. The way we do it is, if the part costs 50 or less, we charge a $75 labor. If it’s 50 or more, we charge a hundred dollars labor. That’s the way we follow the guidelines, and it never changes.”

He further shares how vital transparency is for repeat business.

“When you’re pricing, transparency is everything with customers. And if you’re transparent with them about the process, they’re going to come back to you every single time, no matter what your price is.”

When repair shops price their products and services too high, they make handsome profits on every transaction.

Nevertheless, customers are aware of the value they are getting for their hard-earned money. And once they know that the products are overpriced, they won’t buy from that repair shop again.

Israel Quintal of AdCentral has different thoughts on pricing products and services. He believes in creating a pricing hook first and then upselling the products.

“Now, the way that we attack, the pricing situation, is that first, we go with a hook, right? So, we go really hard after the most common repairs. Then, what we do is that we price it as low as we can.. But on the backend, we have a solid strategy on teaching our managers how to upsell.”

So, do your market research and always keep your prices at a level that doesn’t drive customers away.

5.    Not Selling Value

Repair shops fail to present services and products in the right light. Because of this, customers don’t know what they are getting for the money they are spending.

So, when you are trying to sell expensive products and services, sell the value rather than the product. Advertise the long-term advantages to the customer and show how it will add value to their life.

Some points to consider while selling are:

  • Is it save time?
  • Will it improve efficiency?
  • Can the customer save money?

Jeff Baker, the founder of One Bite Technology, shares his value proposition with the customers. For example, he throws in a free screen protector with every screen replacement. It helps build trust in the customers and enables them to get repeat business. And it will stop your customers from going to your competition.

You can develop sales pitches highlighting the benefits and add them to your cell phone repair store software. It will allow all your employees to access it every time they are trying to make a sale. And won’t miss out on essential details.

Sign Up for a 14-day FREE Trial!

6.    Failing To Benchmark Business

Repair shops often think about what the product should be worth rather than what it’s actually worth.

Study the repair industry and see the worth of the product in the repair shops near you. Next, analyze your competition, and see how your model is similar to theirs. How much business do your competitors have? What’s the reason behind their product selling for what it’s worth?

This is known as benchmarking, and many repair businesses fail to use this strategy.

7.    Poor Pricing Presentation

Some repair shops have done pricing the right way in their cell phone repair store software. But they fail to present it in a good way that impresses and appeals to the customers.

So, build brand consistency by ensuring all the pricing information of your products and services looks professional, clean, and matches your repair shop’s brand. Try personalizing the content for more attraction.

The way you put forth your pricing can make or break a sale. But, nevertheless, don’t overcomplicate things without any reason. If you have any doubts, just keep it simple.

8.    Believing That Excel Works For Price Management Needs

Repair businesses conduct price management through Excel spreadsheets to calculate optimum prices. And then those prices conveyed to all the sales staff who then further convey it to the customers.

Excel is incapable of supporting fast and quick decision-making. Repair store employees miss sales because it takes them ample time to find and convey the best price to the customer.

The modern and more efficient way to do it is through your cell phone repair store software. The repair price calculator will allow your employee to calculate accurate prices in real-time.

9.    Failing To Segment Customers

Customer segments are based on the different requirements of the customer for the product. Therefore, the value proposition for any service or product varies in various market segments. And your price strategy should reflect that difference.

It should include options that tailor your packaging, product, delivery options, pricing structure, and marketing message to particular customer segments. Thus allowing you to get additional value from all the segments that you have created.

Pricing Is A Strong Lever

Pricing is a mighty lever that is mostly underutilized. The most common pricing errors are either pricing too low or targeting the wrong customers.

However, all things being equal, accurate pricing and suitable products should result in a good profit.

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