By the South African Refrigeration and Air Conditioning Contractors Association (SARACCA)
Competitive pricing has evolved. As more players enter the market, businesses are subjected to cost and time pressures in order to beat the competition.
South African Refrigeration and Air Conditioning Contractors Association (SARACCA)
In addition to the competitive environment, the economic fallout of a global pandemic includes sharp price drops, excess capacity, and heightened price sensitivity which ultimately destroys value. The risk now lies in becoming too aggressive in pricing, resulting in little returns compromised on the quality of installations.
How can you eliminate pricing risk and still maintain the competitive edge? The answer is to give equal attention to quality, project management and pricing. While appearing to be a simplistic approach, businesses that offer reliable, quality service and good value are always in high demand. On the other hand, companies that offer cheap pricing but skimp on quality suffer from short-term profit and long-term decline.
It’s an age-old lesson that too many of us choose to ignore. Although sacrificing quality for pricing may grant you some quick profits, you’ll quickly run out of steam when clients fail to return. Favouring quality over pricing will increase your company’s reputation and product loyalty, which will keep your business sustainable.
What is the solution to the risk?
Become aware of regulations and remain steadfast in offering quality installations, even if this is at an increased price. Sacrificing installation quality merely to outbid your competitor is not only dangerous for your client but for your business reputation and sustainability.
SARACCA believes that the focus on quality is essential. It is up to the client and consulting engineer to select HVACR companies based on the scope of work required as opposed to costs alone.
Will clients pay more for better quality?
Absolutely yes, but the client needs to be made aware of the pricing shortfalls. Making the risks that are involved in working with high pressures and certain gases clear will discourage a client to choose cheapness over safety. Communication with your client is essential to ensure that they prioritise the quality of installation.
SARACCA membership selection is based on quality, reputation and value of work. Now is the time to focus on quality, while remaining realistically competitive. It is not worth the profit (if any) to work on projects where standards have been sidelined for cost.
Members of SARACCA are informed on a regular basis on quality standards, as well as new laws and regulations governing the industry. It is vital for all HVACR practitioners to be registered with SAQCC Gas, a benefit of SARACCA membership, and attend informative meetings.
Forbes Business Council recently posted their top 12 pricing strategies* recommended by a panel of experts made up of successful entrepreneurs and business leaders. One technique emphasised value-based pricing as opposed to cost-based as critically important for long-term success. Becoming skilled at quoting while remaining competitive is a tool all HVACR practitioners need to build their reputation and remain in business.
* More information on this complete report is available online.
