Last week I wrote about a cleaner that closed and suggested that if they added a surcharge, it might have saved their business. I gave a copy to my cleaner and she told me I was wrong, and I did not want to argue with her, so I decided to put my thoughts in this follow-up, which I will give to her.
She told me that she gets calls continuously asking for her price for laundering a shirt or cleaning a suit, and when she tells them, they either immediately hang up or tell her she is too high and then hang up. She also rattled off some competing prices for other cleaners in the area. If she were simply cleaning clothing and competing on price, she would be on track. However, my contention is that she is offering something more and that she should be charging for it. She is offering convenience and the habit of a comfortable buying pattern. Let me offer an example.
A bottle of Coca-Cola in the supermarket is about 99¢, at a vending machine in a mall it is $2.50 and at a baseball game $5.50. It is the same bottle in all three places. Another example is to replace the Coca-Cola with a bottle of water and you get the same result, except at the mall or ball game there is a fountain where the water is free. What is the difference between the three locations? It is convenience and availability and possibly the consistency presented by the brand. The soda or water is a product but the other factors are intangible. Further, you and I might value the intangible features differently. One of us might be confident in the brand and the other might feel that wanting it in a location not ordinarily in business to sell soda or water is worth the extra money. However, what you and I think is not as important as the concept that value is added sometimes in a greater degree than the intrinsic value of the product or service being purchased.
Now, let’s get back to my cleaner. She is not solely selling a commodity product or service. She seems to think she is. I do not share her opinion. I see her as also providing the intangibles I mentioned, plus maybe some others. I also contend that the value of those intangibles should be charged for. If the difference is a matter of her survival, then she must do what I suggest. If her survival is not in jeopardy, then perhaps she should do nothing different so as to not upset the present success she is experiencing, albeit less than it was pre-pandemic.
My cleaner is not a commodity provider since her prices are higher than surrounding cleaners. But she has a solid, loyal, long-term customer base who have a stake in seeing that she remains in business. The few dollars added to every check is a way to spread the joy of keeping her in business and maintaining the routine we value.
If you have any tax, business, financial, leadership or management issues you want to discuss please do not hesitate to contact me at [email protected].
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