Originally Posted by TCW
Its called "grocery store pricing." Walmart ends their prices in .88, because people see $1.88 as $1 instead of $2. You are on the right track with a $2 or $3 increase, it will be accepted a lot more than a $5 increase because $38 is psychologically more appealing than $40.
Do you have to accept payment immediately after service? I understand doing this for new customers, but you probably have a feel for which customers will always pay on time and the ones who always have an excuse. The only time we require any payment before or immediately after completion is for customers we have not done business with in the past. I think that lends your company a ton of credibility, and conveys professionalism, when you operate just like the electric company or other home service business. Since its a recurring service, would they enjoy the convenience of having to only write 1 check per month instead of remembering to leave cash under the mat every Tuesday?
If your cash flow can handle it, it may be beneficial to implement some sort of invoicing system, whether it be weekly or monthly. People pay with a check or you charge their credit card, and you eliminate anyone possibly taking advantage of the fact they may not have exact cash.
But, if all else fails, start carrying some petty cash ($10-20 in 1's and 5's) so you avoid the "can I make up the difference later" crowd.
I don't "have" to collect at time of service, but by doing so, I don't need to send out invoices and such. I assume that at some point I may find it more desirable to go that route, but currently it works quite well.
It's actually not very often that someone forgets to leave payment "under the mat" either. Many write a check every week - makes no sense to me. I'd just pay for the whole month if I were the one writing checks, but that's me.
As for writing "one check a month", I think there are always customers who are OK with spending $35/week, but when they see $140, they start to think "Hmmm... maybe I will just cut it myself?"
It obviously depends on the market you're in and I can say that I work in a mix of areas from semi-wealthy, to dirt-poor, so it's something I have to consider. I always give people the option of paying for the month, and a few do, but most pay weekly.
As for "making change", I rarely take payment in person. Most people are working when I am there to cut.
Thanks for your input! I'm not opposed to rethinking the way I do things and it's always helpful to hear from those who have experience in such things.