Fear of losing a customer is a very real concern for small business owners in this day and age. As we heard in our Green Industry Benchmark Report, many lawn care businesses complain because competition is forcing them to compete on price, instead of service. As a result, owners of lawn care companies fear if they start to charge trip charges, their customers will choose to go with a company that is closer in location so as to cut down on the cost of the service.
Trip charges have pros and cons just like any other billing structure. Let’s look at the pros and cons and see what fits best for your business. Each business has its own needs and so not everything will work for all businesses.
Pros
Well the most obvious pro has got to be the extra cash flow. Charging a trip charge allows you to bill for the mileage that is put on the trucks getting to customers’ properties. This can help a lot with your overhead costs and make the drives to the customers who are farther away worth it.
Trip charges can save your behind when it comes time to refuel or repair a vehicle. Driving back and forth all day can certainly put a strain on the vehicles. Most industry professionals suggest that if you do plan to charge a trip charge, to be upfront with the customer about it. You can explain it in detail either on the invoice or over the phone when they call in, but do not attempt to sneak the charge in.
Cons
The cons that come along with trip charges are mainly focused on one thing: customers. If your customers receive their bill and see an extra charge for the trip out to their location and they are upset, what do you do? You can try to explain to them why this extra charge is necessary, but in the end if they don’t feel they should pay it, they won’t. This leads to an unhappy customer or even worse, a loss of a customer.
There are other potential customers who may not choose to use you simply based off of the total on the bill. They may think the trip charge is over board and not worth it for the services they want. The loss of a potential customer can hit hard when you get so close to a sale.
In the end, it is the business’s decision. Some owners feel they should only be paid for the work and knowledge they provide customers while others feel it is important to cover their bases and be paid for a full day’s work, including the drive.
If you do choose to use trip charges within your business, I suggest you invest in field service software to help you track them. I know I am biased since I own such a company, but honestly I wish I had this when I owned my irrigation business. You can add a trip charge right into the work order process so the charge will show up on the bill after calculating how many miles your trucks have traveled. Again, I think as long as you are honest and upfront about the charge, your customers will accept the terms and be willing to pay a little extra for the excellent service you bring.
Already have trip charges and looking for more ways to grow? Read up on the 6 Rules for an Awesome Service Department to make your guys out in the field as efficient as possible.