The truth about undercutting residential prices

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I noticed this post yesterday in the Window Cleaning Magazine Facebook Group. A member had posted something they found else where on Facebook. It was a post about a window cleaner displaying his prices that were far lower than the average, in some cases by 50%.

So what is the logic behind this? Is it that the window cleaner in question has no idea what to charge or is it something more sinister such as undercutting the competition?

The answer is probably a bit of the two. I remember when I started out window cleaning. I had set up M&B Window Cleaning with a school friend.

He would insist on giving prices at the beginning of our joint partnership far lower than I was comfortable with. In fact so insane were the prices I argued that they were not worth doing. That partnership split soon after and I forged a window cleaning business and he, well…. Eventually did another job, as window cleaning was not paying the bills. Go figure!

 

There are a few factors here to consider when ‘sounding off’ about window cleaners undercutting the local going rate.

Are they new to the business?

A learning curve or drive to build a customer base at the beginning of a window cleaning business may include undercutting the going rate. This is done both consciously and unconsciously. The drive to build a customer base quick kicks in the ‘fight or flight’ mode of the brain. Offering lower prices to the new window cleaning business would appear to be the best way to build a residential round quickly if not for survival or following business success…. to stay in the game, to get traction.

This is the unconscious mode.

The conscious mode is when you discover you are lower than your competitor; this is where the drive to squeeze out that competitor becomes overwhelming. They are new to the business and have no idea what they are doing… TO THEMSELVES!

Here’s the down side for the new window cleaner. He is building a round of below average prices. Everything he wants now in life will be below average if this is his main business model.

When the window cleaner charging a fair correct price is able to take his family on holiday, the below average window cleaner will be finding the money to meet the car insurance for the work horse he uses to get him to his customers. When the fair correct priced window cleaner is buying safety equipment, insurance and water fed pole systems, the below average guy will be working from ladders, risking his safety and probably hasn’t even thought of insurance.

That isn’t the worse of it. Below average priced window cleaners will find they have not created a business, they have created a job. Creating a job will mean you cannot increase your work with employees, the very key to business success. You simply do not earn enough; you probably will earn just enough to stick fuel in your tank. It also means there is a limit to how much you can do! If there is a limit to what you can do, why would you cut that by 50%?

Don’t get me wrong, there are a lot of window cleaners out there that work solo charging the right amount for their area with no desire to expand their business with more work or employees (that is another topic for later, ‘Caught in the Solo Bubble) but you live comfortably and you are able to cover sickness and holiday time and some more. That’s a kind of business!

Newbie tricks and mind set.

 A newbie window cleaner might think providing a below average price, much lower than the going rate for the area is a fine sure way of building a business fast, and you know what they would be right… short term.

So then what?

Well two things are going to happen. They would of created a job probably earning around £10 per hour. They will probably stay like this and they may even have to fiddle the books to make ends meet or sign on.

But here’s the other blow, everyone knows that a residential window cleaner can potentially go out and earn £250 in an 8-hour day. But you won’t collect £250. You will be lucky to collect £100! Now you have got to chase the debtors to PAY YOUR DEBTORS. A cycle that will eventually lead you into taking a full time job, maybe you will hold on to some cash work on a Saturday.

Those with the mindset for ‘short term’ below average prices. I like your style; you got to get your foot in the door, right? I understand, and then eventually you will can all the below average priced residential work because you have built up a business with good prices and great payers.

Who are the losers?

If you are talking ‘short term’ mindsets, it is the customers that are the losers. They ditch window cleaners and follow the lower price. But lose out with the ‘short term’ mindset window cleaner as he ditches them for better work, they then get a shock when they are forced to pay full price. They benefit for 5 minutes. They hedge their funds.

Do you want a secure loyal customer or one that will look for the better deal? Lets face it we are not talking billions of pounds here like hedge fund companies, we are talking pennies and pounds. In my opinion if your customer is late all the time with their payment, when you finally get them at the door they scratch around the house for change in order to pay you… or they move to another window cleaner for something like a quid, then they are not the right customers for you!

Let me repeat that – those that have canned you for the lower than average priced window cleaners are NOT THE RIGHT CUSTOMER FOR YOU! Don’t sweat it, there are plenty more that are right for your business.

The last word goes to the serial below average window cleaner who consciously undercuts local going rates…… wait, I have no words for you 🙂

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