Charging philosophy

[clarnibass]

This subject came up on other forums a few times and even caused some arguements. Maybe others here (in this more relaxed forum) would be interetsed to write their approach to this.

Basically the arguement is between two different approaches to charging. One is fixed charges based on "type" of repair, usually with fixed types of repairs too. The other is charging for the exact work that is done, usually with being more flexible about the work (i.e. do what is needed).

I prefer the latter. My main problem with the former is that it can often result in people essentially paying for the work of other people. The latter results in in everyone paying for exactly the work they have done. I understand there are more than a few places which charge based on type of service e.g. 'service', 'repad', 'overhaul', play condition' with a fixed price for each.

In a reply to a suggested price for a bass clarinet repad, I asked about two possible repads.
Repad 1 is changing all the pads, but most other things are ok. Maybe not all corks and felts need replacing, tenon corks are fine, body is ok, tone holes are ok, keys are mostly ok without much key fitting, screws and rods are ok, etc.
Repad 2 is changing all pads, changing all corks and felts, changing tenon corks, many keys bind, many keys are loose, tone holes need work, some stuck or stripped screws, some springs are broken, tenons are wobbly, etc.
Let's say the second repad took twice as many hours and expenses total, basically double the work.

One repairer replied they would charge the same for both, with the former getting a bargain price, the second getting an even better bargain. I disagree with that. The second repad is a bargain but the first repad is overcharging. For the prupose of the explanation we chose the (random) price of $400 for this repad. Here is the explanation.

Let's Assume a repairer is not greedy, doesn't just charge as much as possible and is a reasonable person. Lets say the total work for repad 1 was X. That means the total work for repad 2 is 2X. The total charge is then $800 for 3X work. The repairer found that by charging that they can continue working as a repairer and live their lives.

So with the fixed prices, the repairer is making a total of $800, one customer is paying $400 and so is the other. But one customer is getting X work and the other is getting 2X. Great for the former but lousy deal for the latter.

When everything is charged exactly for the work, the customer of repad 1 would pay $267 and the customer of repad 2 would pay $533. This is each of them paying for the exact work. The repairer works exactly the same amount total and also makes the exact same amount total. The only difference is how it is devided between the customers. Though in reality if a repairer can afford to charge $400 for 2X of work, they should be able to charge $200 for X work.

Replace that "$400" with any other fixed price and the work with any type of work, the principal stays the same. The above is a relatively extreme example but it works the same way regardless.

Of course it's not possible to always be exactly 100% correct and get everyone to pay exactly for the work done, but I try as much as possible to achieve that as close as I can.

 

[Steve]

I really do not understand why this is an argument.

In my perspective I believe that any repairer should charge whatever price they deem is sufficient for the work that they perform.

In order for an exact price per work done then the repairer must keep a good detail of work performed. Some repair people may see that as additional overhead that they simply don't want to do. Now one can criticize that person but truthfully, if their customers are fine with it then that is all that matters.

now add to the equation location. Someone in a small town working in the back of some other store, in say Nebraska versus a retail sidewalk shop in New York are going to charge different prices for everything. One can have a monthly rent of $250 and the other $10,000. Thus prices and the methods they use can vary accordingly.

To me , it all comes down to what the market will bear, what level of income the repairer can achieve based on their locale and marketing (if any).
So price, quality, location and what the repairer deems fair value for their work.

Additionally, if a well to do customer gets work done and then a student from a poor family gets work done .... guess what ... the poor student will probably get far more for far less (at least from me). Price discrimination ? maybe by the letter of the law but the poor student will have a higher morale and maybe will progress much more than they would have (and that to me is worth my value to them) .... and they may become more of a constant customer too.

basically, it's to each their own based on what their customers and the market will bear if you ask me.

But there is one major exception. I use the Terry law which states that one MUST charge exhorbinant prices for any work on an Alto Clarinet.

 

[Steve]

This reminds me of my location here and a few comparisons.

A now defunct store - the long time owner/repairer passed away - had super low prices and being a tech was a lifelong passion. But, this was a lifelong business - probably 50 years. He was around when Detroit was big in music, big bands, etc. All his equipment has been paid for decades ago, he had large stock of everything, building paid for. So basically extremely low overhead.

his prices were very low for good quality work.

Now compare it to 8 miles away in the suburbs. Higher prices for ok work, more detailed pricing etc. in a much NEWER building, rented.

That when one realizes that an established place has lower overhead. A new place has higher overhead ... just out of the gates!! Thus prices will be different excluding quality.

In the end, it's a consumer choice based on location, price and quality.

 

[tictactux]

But there is one major exception. I use the Terry law which states that one MUST charge exhorbinant prices for any work on an Alto Clarinet.

If a repair shop decides to actually touch an Alto with their bare hands, they have a de-facto monopoly and can charge whatever they want.
(some will, on the other hand, grant a commiseration rebate as the player is punished enough with the sheer possession of such a dethpicable instrument)

Whatever the actual approach, businesses in the internet are faced with the necessity to quote prices in order to give the potential customer a rough idea how costly something (preferrably a type of service that can be compared) will be. For an instrument shop this is no different from a car shop or a hairdresser's.

If you quote "hard" prices for a given service, you will inevitably treat customers equally on price but differently on service provided. Here, Rosemary (the one with the baby) pays the same price at the hairdresser's as Rapunzel. You could argue that either left the shop as a new person, hence the same price is due. Others may argue it'd be unfair that Rosemary had to pay the same for an easy job as Rapunzel with her tangled mass.

Same goes for "wealth" discrimination. You could argue that every one should work say 2 hours to get his or her clarinet fixed. So you'd charge Mr. Rockefeller slightly more than Mother Teresa. Sounds fair, doesn't it? (FWIW this exact thing happens on a per-country basis; Mrs. Chihiro at the Tokyo plant doesn't get paid more when her instrument is going to Geneva instead of Flint, Mich.)

Yeah, pricing in a globalized (and well-informed) world is a difficult task. And we're all actors and victims, demanding a fair price for our work (rightly so) and go shopping where it's cheapest.

 

[Gandalfe]

(some will, on the other hand, grant a commiseration rebate as the player is punished enough with the sheer possession of such a dethpicable instrument)

Ben, thinking you are quoting (dethpicable) Sylvester the cat here, I have to wonder where you learned to speak English? I always wondered what your native tongue was?

As a very poor repair tech, no patience for the detailed work, I appreciate skilled techs. And, truth be known, I get to know my techs, take care of them, and help them with other projects (websites, bring 'em coffee, bring them new customers). So I often get steep discounts. One time I got a major repair job on a very big instrument for free because the tech wasn't able to complete the job when he said he would. (He was off by two months.)

I always get a quote for the repair job and a call if the tech finds something not covered by the first estimate. I don't ever really concern myself with what others are charged, just whether the price for the job I'm having done seems fair.

Here's the weird thing, the best techs seem to charge the least amount of money. And the conversations we have during most of the work, is fascinating as these techs are teachers and performers as well as repair techs. If a tech doesn't want to see/hear from me, I would go elsewhere. But then in Seattle, I do have a lot of great people to select from. In Podunk, Iowa it might be a different story.

 

[tictactux]

Ben, thinking you are quoting (dethpicable) Sylvester the cat here, I have to wonder where you learned to speak English? I always wondered what your native tongue was?

I learned English the plain old school way. (my native tongue being Swiss German, btw). Of course, I did some reading in the meantime, as well as watching movies and following silly discussions in online communities. A life-long learner... ;-)

 

[Carl H.]

In Podunk, Iowa it might be a different story.

There are excellent techs within a short drive from Pudunk.

 

[SOTSDO]

One does not repair an alto clarinet - one simply discards it and picks up another professional grade one on eBay for the price of a Big Mac, fries, and a large soft drink...

 

[tictactux]

There are excellent techs within a short drive from Pudunk.

Yeah, but that's in Michigan (according to Google Maps)
<light bulb moment after consulting the Urban Dictionary>

See, Jim, I learn something new every day.

 

[pete]

I'm a computer tech, but I really don't think you have to be an instrument tech to contribute to this discussion.

I start out with one flat price: $75 an hour, one hour minimum (if I like you. $7,500 if I don't). I compare this to the repairmen I've gone to that have a "shop minimum". If you or your instrument repair guy doesn't have a shop minimum, probably your car repair guy probably does (as in, "We'll charge you $25 to hook up the computer to find out what the car says is wrong").

Now, $75 an hour is more than I make at my "9 to 5" job, but what I get paid is only a portion of what the company is "paying" to have me work. What they pay is something called a "burdened rate". It's my salary + how much it costs/is likely to cost for training me + getting me a cube, computer, etc. to work with (i.e. "tools") + how much they think it'll cost to have me in the building + insurance + more. When I was an accountant/office manager, the person's actual wage was about 1/5th the burdened rate.

Here's a portion that I've rethought: there are many computer things that I can do that don't require my constant attention, such as doing virus scans. Provided that I'm working at my home and can do something else while your computer is chugging away, I'm probably going to charge a flat rate over and above my minimum $75. I recently did this for a person whose hard drives were toast: shop minimum + $100 to scan and attempt to repair your hard drives. Took about 8 hours, but it didn't need my attention -- other than to tell the computer to g'head and start the scan.

If you're working in a shop with multiple techs and you're the "lead" tech, one way of looking at it is that you can get one of the other guys to do simple work at a cheaper price than you'd charge per hour because the work is simple and there's no need for your intervention. However, if the job required the lead's constant attention, he'd have to charge more.

On rare occasions I have quoted prices for packaged deals. Like, if you want me for an 8-hour day, I'll do whatever you'd like me to for a particular rate. That rate's based on a sliding scale that depends on the work. If I have to rebuild computers from a pile of parts, I'll charge more than if I just have to move a bunch of computers around a building.

I always get the user to pay for parts. I might also charge a bit above and beyond if I have to spend days trying to find the appropriate part (I once spent that long trying to find an IBM all-in-one '286 that was required for a million $ machine to work properly).

Speaking of parts, I occasionally have to get something really odd that's needed to work with something else that's really odd and then I have to make them work together. I might charge more for that. It's like you'd charge more to repad a Leblanc Le Rationnel than a Yamaha 62 because there's a whole lot more that needs to be done on that Leblanc than that Yamaha.

In any event, while my system works for me, it might not work for someone else and that's fine. I'm also not even trying to be competitive (even though my prices are). The one thing I have is that I'm more convenient. Most of my current clients are my coworkers.

 

[clarnibass]

Now one can criticize that person but truthfully, if their customers are fine with it then that is all that matters.

That's what I disagree with. I don't charge whatever just because my customers are fine with it. I could probably charge considerably and they would be fine with it too, but I don't. I have to charge in a certain way that is fair both to me and to customers, regardless of what the customers know (most are not especially interested in these details).

now add to the equation location. Someone in a small town working in the back of some other store, in say Nebraska versus a retail sidewalk shop in New York are going to charge different prices for everything. One can have a monthly rent of $250 and the other $10,000. Thus prices and the methods they use can vary accordingly.

Maybe it wasn't clear. Overheads and actual low or high prices are completely different issue. The point is only about the approach to charging, not the prices themsevles. You can see in my example, the repairers work and charges exactly the same in both cases. This applies no matter how high or low prices are. Some places might charge more than they can/should and some places have high prices which are justifued, but this is something different completely.

To me , it all comes down to what the market will bear, what level of income the repairer can achieve based on their locale and marketing (if any).

Again, point is the income is the same, only devided between the customers in different ways. One way exactly for the work done, one a fixed price where, regardless of what the repairer may think, the fact is one customer is paying for the work done for another.

Additionally, if a well to do customer gets work done and then a student from a poor family gets work done .... guess what ... the poor student will probably get far more for far less (at least from me).

Of course there are exceptions. I sometimes give significant discounts, but again this is seperate subject. I'm talking about the genetral approach to charging. When I give discounts like these I would probably be losing, or at least not making anything. I then work for a price that, if I charged always, I would be bankrupt very fast and have to stop repairing! I don't feel comfortable charging higher prices in general to cover for those exceptions, that's exactly what I'm trying to avoid!

Whatever the actual approach, businesses in the internet are faced with the necessity to quote prices in order to give the potential customer a rough idea how costly something (preferrably a type of service that can be compared) will be. For an instrument shop this is no different from a car shop or a hairdresser's.

No one here seems to have a problem when, on the phone, I explain I need to see the instrument before I can give a price. The few times people still insist on at least a rough idea, I tell them a range from the lowest and highest it ever cost to do that specific job. But even then, sometimes it's impossible.

A recent example, someone said the register key doesn't close and the pad probably needs to be changed. I explain I have to check what the problem is but gave a range of prices for just replacing that pad, if it is really the problem. They come, the pad definitely needs to be changed, however the flat spring is broken and the rod screw is stuck with a ruined slot...

Yeah, pricing in a globalized (and well-informed) world is a difficult task. And we're all actors and victims, demanding a fair price for our work (rightly so) and go shopping where it's cheapest.

If you know what you are getting that's ok (e.g. same product in super market) but the problem of buying cheapest can be that you'd have then have to buy again later. More than a few times people I've had people bring an "overhauled" instrument that required tons of work, sometimes a new complete repad, to repair. But still, that is also not the issue of the approach to charging, what I feel strongly about.

 

[tictactux]

No one here seems to have a problem when, on the phone, I explain I need to see the instrument before I can give a price.

The phone isn't the issue. The problem is that potential customers roam the net for a repairer in their vicinity, and try to find out reputation and prices (and usually do so outside of business hours). Then they might decide to ring up the next day.
I don't know, when does your web site generate the most hits? (mine does from 22:00 onwards)

 

[tictactux]

An interesting observation...many moons ago a local youth music school contacted all the bands in town if they had instruments that aren't used any more, so they could be donated, refurbished and used in schools, especially for less than well-off students.

I rummaged my attic and found some instruments that might fit the bill. I gave them to my band buddies for a play test (I'm not the most competent flute tester ever) and they were all considered "fine and certainly usable", maybe in need of a minor touch-up (more cosmetically than mechanically).

So I packed the instruments and sent them to the school's assigned music store for appraisal. Now this morning I get the verdict that they wouldn't take any of those instruments as the cost of labour involved with making them "school ready" would - by far - surpass the instruments' inherent values. (In the wake of these findings, the store suggested the school buys new student grade instruments and tended a suitable offer, big surprise)

So...either
- the store has exorbitant repair rates
- they sell student instruments at rock-bottom prices (or cross-finance them with high-price pro instruments)
- my band colleagues are incompetent at determining their playabiliy
My explanations gravitate around the two first points. Sure, when you can sell an instrument-grade flute for $300, why bother touching up a Yamaha student flute, or worse yet, a Bundy. Not even a Noblet Artist clarinet was considered worthy enough. Oh well.

I fear that this music shop is sawing off the branch they're sitting on. When it becomes custom to throw away instruments rather than to repair them, why shouldn't an entity order them directly from some manufacturer? -- You guessed right, because the manufacturer doesn't sell to end users but only to businesses, via a "sole importer", keeping prices on a healthy level and maintaining a monopoly. (unlike in the U.S., cartels are only forbidden if they're abusing their power. Parallel imports, on the other hand, are forbidden by some funny article in the patent law). That system stinks on so many levels.

Anyhow, I know of a music school out there in the rural parts of the country. I'm sure the repair folks there have more competitive prices than a posh city shoppe with their mostly famous clientele (of which many don't have to pay for their repairs themselves).

'nuff vented.

 

[Gandalfe]

Musical instruments as a disposable commodity. I don't think that model will work; people will figure it out and benefit. Witness my friend QuinnTheEskimo who has a phenomenal business selling used instruments.

 

[Steve]

the fact is one customer is paying for the work done for another

Actually the business is giving up profitability. The other customer isn't paying for the other customer as they are two completely different projects and labor/cost processes ... if you truly want to look at the cost/profitability per project (instrument).

I also don't recall on tax forms "customer donations/redistribution" but there is a overall profitability line.

Labor in the US is considered inherent in the business. if one is paid a fixed amount per month (ie, Salary vs Hourly) then it doesn't matter if that person is working 40 or 50 hours a week. Thus working extra time on an instrument can be considered irrelevant in relation to labor costs if salaried (or the owner/proprietor) and most don't track the disposable items as they are normally reordered in bulk.

But, I understand your point though. And the methods used to run a business are based on one's experience in the local market and what one wants to do and company targets. There is no right or wrong in pricing methods with exceptions of course with the relevant market pressures.

 

[Steve]

.... So I packed the instruments and sent them to the school's assigned music store for appraisal. Now this morning I get the verdict that they wouldn't take any of those instruments as the cost of labour involved with making them "school ready" would - by far - surpass the instruments' inherent values. (In the wake of these findings, the store suggested the school buys new student grade instruments and tended a suitable offer, big surprise)
....

I hope they sent the instruments back to you ?

or do they eBay them afterwards and pocket the money ?

 

[clarnibass]

- my band colleagues are incompetent at determining their playabiliy

The other options are possible but regardless this is also likely. Sometimes sure, a player can play the instrument and have an approx idea what is wrong and how much work is needed. But very often (and this includes excellent very high level players) they can't. It's often that a player thinks their instrument need an overhaul when in fact it doesn't need anything even close to it, or the opposite where because of the resistance, especially in low notes, a player thinks there is a minor problem of the pads leaking there, when in reality all pads leak significantly. So although possible, without a good mechanical check by a good repairer it's not really possible to know in many cases. But it's alos very possible that a store pushes to sell something else, possibly the same (or more, or less) profit for less work (or work that was already done i.e. they already paid for and worked on importing the instrument).

because the manufacturer doesn't sell to end users but only to businesses, via a "sole importer", keeping prices on a healthy level and maintaining a monopoly.

Same here pretty much, most instrument companies have only one importer/dealer so if you want that specific model, you have to accept the price from that dealer (or buy used, etc.).

The phone isn't the issue. The problem is that potential customers roam the net for a repairer in their vicinity, and try to find out reputation and prices (and usually do so outside of business hours). Then they might decide to ring up the next day.
I don't know, when does your web site generate the most hits? (mine does from 22:00 onwards)

Phone, internet, whatever, it's all the same really. People don't go by websites for this much here. I have only a few come from my website in comparison with word of mouth. People want to ask others for recommendations, then they call. Most repairers here don't have websites and AFAIK, none of the few who do have any prices on their website. Whether someone looks at my website and asks others first makes no difference at all. I just haven't found that what you describe here is a issue in any way. If customers tell others what they paid that is fine with me.
I don't know when most visit my website, I never check. But I don't have business hours anyway since I work from home.

Actually the business is giving up profitability. The other customer isn't paying for the other customer as they are two completely different projects and labor/cost processes ... if you truly want to look at the cost/profitability per project (instrument).

That's exactly the point of view I disagree with. If the claim is, in the example I gave, that you lose profit on the second repad, well obviously the total is an amount that is ok. That means $400 for 2X is fine, so X should be charged $200 and the total of $600 for 3X should be ok with that repairer. Then, if they charge $800 for 3X, that is overcharging and only the repad 1 customer is paying it.

Labor in the US is considered inherent in the business. if one is paid a fixed amount per month (ie, Salary vs Hourly) then it doesn't matter if that person is working 40 or 50 hours a week.

But many do get paid by the hour. Even when not, at least in msot situations I'm familiar with, there is a minimum amount of hours the worker has to work, with a maximum of vacation days, sick days, which are the same for the workers with the same job and workers who work more than that get paid extra. It's the same really. Some people just don't work as much as others in the normal hours and that can be annoying. But it's a different issue.

But this is different. I definitely earn in some months very different form other months. Still, regardless of what that is, I aim as much as I can for each customer to pay for the work he had done.

There is no right or wrong in pricing methods with exceptions of course with the relevant market pressures.

IMO there is right or wrong from an ethical point of view, regardless of the market.

 

[tictactux]

IMO there is right or wrong from an ethical point of view, regardless of the market.

Eek, ethics. Now what an outlandish concept is this?

(I'm just pulling your leg and I sympathise with you)

 

[pete]

I don't mind diving head first into the ethics pool.

You're questioning a basic rule of Capitalism, clarnibass. You'd charge less than the market can bear? If that's your point, under what circumstances?

(I'm trying to rope someone else into the discussion.)

If we're talking Business 101, it is possible to charge less than the market can bear, provided that a) you still make a profit and b) charging less results in increased clientele. If you're not making a profit, the business dies.

Supply and demand works for both the consumer and producer.

One of the reasons I charge (comparatively) more than other folks (GeekSquad, etc.) is because I really don't want more business because I've got enough on my plate. I also have much more experience and I won't laugh at you when you've forgotten to hit the power button or connect a cable. At least, not to your face.

 

[clarnibass]

You're questioning a basic rule of Capitalism, clarnibass. You'd charge less than the market can bear? If that's your point, under what circumstances?

It's not the point. That is a different issue that Steve brought up and I was commenting on that too. But I thought it was pretty clear what I meant in the first post. I'm talking about a situation where the total a repairer makes is the same (to illustrate the point). It's only how the total price is devided between customers that is the issue. So how much a repairer makes is actually irelevant. Let's just say they make enough to stay in business, that's the whole point.

If a repairer has fixed prices and relies on some repairs to "average" i.e. make more for the shorter repairers and less for the longer repairs, then that's exactly the problem I described. Some customers are paying for the work of others. I hope it is (finally) clear?! If someone doesn't see that this is a problem then what can I do, but I think it is a bad approach.