Is Their a Price Ceiling in the Pool Service Industry?

 With the crazy inflation and of course the crazy price hikes at businesses because of this, is there a ceiling we can reach in the pool service industry? Can we reach a point where weekly pool service is priced out of the market? The answer is not a simple yes or no but how your services are perceived.

Are you an essential service that the homeowner is willing to pay for? I used the example of the $19.00 burger special from a new local burger place. That is almost twice the price of similar restaurants in my area. I am afraid to say that customers are not lining up for a cheeseburger, fries, and a medium drink for $19.00. That is more than the price of most fancy restaurants that have burgers on the menu. They are priced out of the market in my opinion and good luck to them as a $19.00 burger special does not fit the category of an “essential meal.”

Most consumers will look for the price point in the middle. I do the same thing when I am calling around to establish a new service for my business. I’ve called electricians and asked for a bid for a job and more or less I expect some low bids, some high bids, and some bids in between those. So which bid do I accept? I toss out the low bid as being too cheap and maybe there is a good reason for that but maybe not. I look at the top bid and see why it is so high over the others. If there is no reasonable explanation I toss that one out as well. Then I am left with two or three middle bids. These are the ones I look at closely to see which I will accept. And I think this is how most people do things as well.

So what is too high for weekly pool service? It all depends again on if you are perceived as essential to the homeowner. Can they do the pool themselves? This requires time and a level of skill. They will also be faced with inflated chemical costs at the local pool store as pool chemicals are no longer dirt cheap. Gone are the days of $85.00 buckets of 3” Tri-Chlor Tablets, $2.50 liquid chlorine, and cheap Cal-Hypo. T

Most pool owners will want to protect their investment with a pool service professional taking care of their pool. It cost on average $60,000 to $80,000 in my area to put an average-size pool in (In-Ground pool). With that much invested in your pool, most people do not want to mess that up by trying to do things themselves. If you had a $90,000 Porche you probably are not changing your oil. Same with the cost of a backyard pool, now pool service is worth it.

 

In that same vein, pool service is still lower priced than the inflation rate. If you look at the average rate 3 years ago in my area it was right around $100.00. Gas was about $3.00 a gallon. The average car payment in 2019 was $500. Now that is pushing $700. The typical mortgage payment is up 40% from just one year ago. Raising your service rates from $100 to $150 over that same 3-year period is a 30% increase. Gas has gone up 50%, the cost of a new car is up 30%, and as stated your monthly mortgage payment has gone up a whopping 40%! A 30% increase is more than acceptable over 3 years in this day and age of runaway inflation.

But there may be a ceiling like with the $19.00 burger special. Some sign that your pricing has reached the ceiling is that you are no longer landing as many bids. Maybe half the bids or less that you landed last year. Customers may cancel service for no reason but I suspect a lower-priced company has moved into your area. It’s kind of a hard place to be in when you can’t control the cost of your business and you can’t keep prices at a point where you are not making a profit. It is a fine line that has gotten much finer due to the crazy inflation inside the pool industry.

 

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