Like any good business manager I monitor sales, productivity, delivery, customer satisfaction, and profitability of the Lab Services group frequently. While some of these are easier to measure than others, profitability is probably the easiest. For the most part it is a simple calculation of revenue minus cost. Being a government contractor makes the cost calculations much more complex, but luckily we have accountants for that!
On the flip side, setting price is significantly more difficult and is riddled with questions that tend to keep me up some nights. The accountants will say “price should be set to ensure we are x% profitable to maintain a viable business”. The sales team says “price should be set to ensure we are competitive in the marketplace”. The reality is that they are both correct and the answer lies somewhere between the two – but where?
In my quest to set prices to make both the accountants and the sales team happy I generally start by trying to find out how the competition is priced on similar testing services. The problem is that most of the competition in the physical testing world doesn’t publish a price list. A few do, but most don’t. Yet another question for my insomnia – why not? They have to share the price at some point in time, right? I suppose they don’t want to scare away a customer with an unsupported price on a website and feel that they can woo a prospective customer by having direct communication with them, but I don’t buy it. If a prospective customer is shopping for testing based on price, then price and price alone is the only thing that can woo.
After losing many hours of sleep throughout the years I have come to the conclusion that some customers of testing services will shop on price, but most will shop on value. Most are willing to pay more for:
- Expertise – EWI Lab Services has been in the testing business for over 15 years
- Name recognition – EWI is recognized globally for joining solutions including testing
- A strong understanding of the fundamentals behind the testing – most of our engineers are active participants on ASTM and AWS committees.
- Better delivery – EWI Lab Services has a one stop shop – welding, NDE, machining, testing, chemical analysis are all done under one roof giving us greater control of the testing schedule and making expedites possible
- Better quality – EWI Lab Services is A2LA accredited to ISO 17025.
Thus, I have decided to continue to publish our pricelist on our website. It may scare away some, but I suspect most will see the value of EWI Lab Services beyond just the price.
Question for the other insomniacs out there: When are you willing to pay more?