Tuesday, May 27, 2008

They Just Won't Pay That Much!

I hear that all the time from colleagues around the county when we discuss what their retail hourly rates are, or should be, or could be. (When I say retail, I'm referring to your non-member, no discount, non-emergency run-or-the-mill assistance towing rate.) If I say, "Oh, we charge $xxx/hr for non-members", they often reply "Oh gosh! Our customers just won't pay that much!"

And I wonder....hmm, won't pay, or just don't want to pay? There is a big difference, and I think some guys confuse on with the other.

Look, nobody wants to pay a dentist $200 for a filing; if they were asked, they might offer $75 as a fair price, because that is what they were charged 20 years ago. I would guess the dentist has a portion of his patients who express some displeasure or shock at his charges, but for the most part he probably sticks to his business plan and raises his prices to fit his profit margins, rather than adjust his fees downward until his last cheapskate customer is happy. (ps: do you always go to the cheapest dentist you can find? Why not?)

Nobody wants to pay for a tow, either. Especially since needing a tow means their day off has probably been spoiled. So, they are already mad and frustrated when they finally call you. At that point, there is probably no rate that you could quote that will have them saying "wow, thats cheaper than I thought! C'mon out and get me!" So, stop basing your rates on your customers emotional reaction to the price.

There wasn't a single boater out there this Memorial Day weekend that was happy about the fuel prices they found at the docks, and not a single one wanted to pay that much for fuel. But my sources tell me that many towers around the country had a pretty average weekend (we did over 30 cases here in Rhode Island), so boaters were boating, and certainly paying more than they wanted when it comes to fuel. I bet 2 years ago, many of those same colleagues would have said "nobody will pay $5/gal for fuel." Guess what? They paid. Double guess what: there are still plenty of fuel docks that are taking their standard 20% markup, even at these prices.

[off topic: Is there a price for fuel that will cause the boaters to say forghettaboutit? Absolutely, and we may be in danger of reaching that threshold at the fuel docks in the near future. When that happens, it won't matter what your rates are, because there will be nobody to tow.]

Bonus Question: if a boater burns $100/hr when he's making 20 kts, and you charge him $200/hr for a tow, how much will a 20 mile tow actually cost him?