An important question every business owner needs to ask himself or herself is, “How much should I charge for my products and services?” While it sounds like a simple question, underneath lies a pretty complex problem. On one hand, you want to set your prices to reflect the true value of your work. You never want to leave money on the table. But on the other hand, you also have competition that is working to win business from customers. These two factors are the push and the pull of setting prices for your detailing services.
If you want to have a successful detailing business, you need to bring in enough revenue to turn a profit. But at the same time, you need to have a pulse on the market and know what the shop next door or across town is charging for its services. In this article, I want to cover how to do both of these things without compromising the true value of your professional services.
According to our company’s research on detailing prices, auto detailing businesses around the country charge, on average, $160 dollars for their services. Across the U.S., though, prices drop under $20 in some areas and go above $300 in others. This is a huge pricing gap. Why are we seeing that? I think there are two reasons: high competition and a broken pricing model.
Detailing competition is tough
Detailing is a competitive industry, especially in certain states and cities in the U.S. According to our research, California alone accounts for more than 13% of detailing businesses around the country, with about 4,000. Within California, the city with the most detailing businesses is Los Angeles, with 2,035. Los Angeles makes up more than 50% of all detailing in California and almost 7% around the country. If you’re a detailer in California, especially in Los Angeles, I don’t need to tell you that it’s a tough market to compete in.
One big reason for high competition in detailing is that the barrier to entry is low. Technically, all you need to enter the market and start your own detailing business is a water supply and some cleaning materials. Now, I’m not saying that this is all you need to be a great detailer, but this is the root of an issue.
You can have one detailer who is just starting out, has very few tools and very little experience and goes up against someone who has been in the industry for decades. How does this situation with detailers of different experience levels and quality sort itself out when it comes to acquiring customers and setting prices?
The great compromise: unstandardized detailing prices
For a long time now, detailing businesses have used a menu-based pricing model. Customers can choose their services from menu boards that are either posted at the shop or on a website — from a “basic” package that includes external washing, waxing, interior vacuuming, polishing, window washing, mirror and trim cleaning, and tire cleaning to a “premium” package that might add paint correction or ceramic coating. This set menu pricing should be a great equalizer at creating standard pricing, right?
Not exactly. Thanks to Yelp, company websites and online scheduling, consumers can research shops, pick their packages and pricing, and schedule appointments online. While this is great for the consumer’s shopping experience, it’s not great for the detailer. Especially the really good, experienced detailers. The entire process can happen without the detailer seeing the car’s condition or the customer considering the difference in quality between one detailer and the next. When the industry’s pricing structure relies almost entirely on who can win more business with the lowest price on a website, for instance, the value of all detail work decreases.
In any other industry, the more experience you have or the higher quality you offer, the more you get to charge. With the current state of menu-based pricing, even the best detailers aren’t charging the true value of the work based on the conditions of the vehicles and their experience levels. Ultimately, this means that detailers have lost control of the value of their work. In the current state, consumers have all of the power to own the price of a detail, which forces businesses to drop their prices to compete.
I’ve talked to a lot of detailers around the country, and it’s clear that there is price confusion around the industry. Everyone knows that they should charge differently for ranging variables of a car’s condition, but no one really knows how to charge for those variables consistently. Because of this, detailers are probably leaving 10% to 30% of potential revenue on the table.
Customer-friendly, variable-based pricing
Detailers have been saying for years that consumers don’t understand their work, so they can’t charge the true value of a great detail. Are the prices that you charge as a detailer really reflective of the time and resources you give to each car? If two customers select the same pricing package and the first car takes you 3 hours while the second car takes you 4 hours, you’re probably charging the same price. If you’ve ever done this, you’re definitely leaving money on the table.
It’s time to supplement your menu with technology that educates your customers and helps you get to a standardized price based on the car’s condition. The future of detailing isn’t just about charging more money. It’s about finding a way to educate customers and earn their trust so that the price agreed upon is truly based on the value of the work.
The ultimate goal is to build estimates with your customers instead of just for your customers. You can — and should — set a price on the unique factors and variables of each car that comes into your shop, and there should be a solution to help customers understand those variables and prices. Here are some of the types of variables I’m talking about:
- Pet hair
- Sap/tar/overspray on the exterior
- Paint refinement
- Deep scratches
- Take out seats/disassemble
- Special tool/product usage.
The future of detailing
I came out of the paintless dent repair (PDR) industry, and worked as the vice president of Five Star PDR in Austin, Texas, for 10 years before cofounding Mobile Tech RX. It’s been interesting to watch the PDR industry change and grow. It’s still a competitive market, but business owners are actively working to raise their prices fairly, and they are working to bring the industry up instead of racing each other down to the lowest price. This is to the benefit of everyone.
It would be wise for detailers to follow in the footsteps of PDR pros. You have a chance to take a stand and use tools that push the industry towards price standardization, more trust between customers and business owners, and more revenue that reflects the true craft of a quality detail. Great detailers are craftsmen; I believe they should earn like them.
The future of detailing should make a clear distinction between hobbyists and craftsmen. Variable-based pricing helps detailers distinguish themselves in the marketplace, educate customers on the value of their work and stop compromising on price. With new technology, detailers can charge the perfect price for every job that arrives at a non-negotiable estimate. Not only will the great detailers earn like craftsmen, but customers will understand what goes into the art of a great detail, and the entire industry will benefit.
Eric Garves is the CEO and co-founder of Mobile Tech RX, the leading business management software for detailers and auto reconditioning technicians. Prior to Mobile Tech RX, Eric was a partner and vice president at Five Star PDR in the Austin, Texas, area. He launched Mobile Tech RX in 2014 with his partner, Daimen Simmons, and became the CEO of a software company with a mission to help professionals across detailing, interior, paint, wheel and dent repair make more money and grow their businesses. Eric holds an economics degree from the University of Arizona. You can reach him at [email protected]