What to charge for pool service is not often discussed in our industry due to fear of anti-trust laws or price fixing. But while we need to be careful, everyone must figure out what to charge to run a profitable business. I’m not talking about cash flow or moving money around; I’m talking about understanding your costs and how to make a profit on top of that. How is a business owner supposed to do that if the industry doesn’t talk about it?
A Price Matrix
On Episode 145 of the Pool Chasers Podcast, we talked to Rich Gallo, founder of Pure Swim, a high-end pool service company in Los Angeles, about how to build a pricing structure. The results are going to be different for every business based on location, labor rates, services offered and cost of goods, but the overall concept is the same.
The matrix comprises five categories:
- Labor: Wages, payroll tax, workman’s comp, benefits and anything related to the cost of having an employee or yourself out in the field
- Vehicles: Loan payments, insurance, fuel and maintenance
- Chemicals: Chemicals included in your services such as chlorine tabs, shock, acid and specialty chemicals
- Overhead: Office rent, office manager, route manager, phone service, internet, etc.
- Profit: The percentage you would like to make on every pool
The first four categories (labor, vehicles, chemicals and overhead) give you the total amount that it is costing you to run your business. To get the profit number, you will take the total of the four categories and multiply them by the percentage of profit you want to make and then add those numbers together, giving you what you should be charging on a monthly basis for pool service.
Everyone’s numbers will be different due to their circumstances, but if you take the time to figure out what each section is costing on a monthly basis, then you can determine your prices. This process will take some time and you may have to dedicate a day or two to gathering the information, but won’t it be nice when you fully understand how to make money for all the hard work you are putting in?
One good thing to come out of the pandemic is that our industry is booming at a rate most of us have never seen. A historic number of pools are being built and stuck-at-home homeowners appreciate their pool more than ever. Now is the time to change old habits and embrace that you are running a business and your business needs to be profitable. Take the time to figure it out, update your pricing and be assertive when increasing your rates. Confidence is key when selling your services; you are more valuable than ever and should be paid accordingly. We understand that this may be a lot to grasp in one article, so we have built a free download where you can input your data. You can find this form and listen to the full podcast episode by visiting our website PoolChasers.com.
