Ways to Raise Your Rates, Part II

By Donna West

(Part I of this article appeared in the January/February issue of Connections Magazine).

14. Archiving messages: Be sure you charge for printing out messages and for archiving messages over three days old. In fact, you can tier the charge for archive storage of messages: three days is free; three months is $2.50 per month; a year is $4 per month, a bargain for those who need this service. Retrieving this information from the archives is an additional $10 for each day that is required. Remember, it’s a time consuming process to search the disks for the correct information, and if it is not time consuming with your equipment, it is still a nuisance.

15. Changing the way you bill is often the best way to raise your rates: Go to a 28-day billing cycle. Our company, Focus Telecommunications, has been billing every 28 days since 1990, and we only have to explain once when we sign a customer up. It’s not a stumbling block. We just say, “We bill every 28 days because our business is very labor intensive, over 50% of our income goes to payroll. Billing every 28 days helps even out our cash flow.”

There is another plus to 28-day billing; you always bill on the same day of the week, no Saturdays or Sundays. If further explanation is needed, tell your customers, “We know what we need to run our company for a year, we simply have divided that number by 13 instead of 12 to determine our pricing.”

Hint: If you go to 28-day billing and you are on a two-week payroll cycle, be sure you bill on a week you do not have payroll. Also it helps if you bill early in the week.

16. If you have “flat rate” or “capped accounts”, uncap them! Why should a few customers get a break like that? Your operators don’t work for a flat fee no matter how long they work. In addition, charging a flat rate causes your smaller customers to subsidize your larger customers! Eventually your smaller accounts will go away, and you will be making less money than you should on those larger, flat rate customers. Flat rates are an insult to your customers and our industry.

17. Time billing: If you are currently charging for “units” or “calls”, we suggest going to time billing. We believe it’s the most fair way to charge. A message center only has time and courtesy to sell! Naturally, there will be some customers who are really going to be “shocked” when you change to time billing. Always stress at any rate increase that you’re happy to work to reduce the cost of labor on an account and thus the over all price.

18. Charge based on the degree of difficulty: Another rate increase that will take some work on your part (but it’s worth it), is to have separate base rates and additional minute (or unit) charges based on the degree of difficulty of the account. At Focus the degree of difficulty usually has to do with the delivery instructions. This is because all the accounts are billed on time usage. If a company uses unit billing then the degree of difficulty could also incorporate the message template instructions and prompts. For example, if there are one or two people on the account, and we page all messages with fax back-up, that is a level one account and the rate may be $65 for 60 minutes of time and $.90 for each additional minute and $15 for fax.

If there are four or five different maintenance personnel who rotate on-call, each has their own pager and each wants us to call the home between 10:00 p.m. and 7:00 a.m. That’s a level two account, and it might be $85 for 60 minutes and $1.25 per additional minute and $5 maintenance fee.

Now let’s say that there are 30 people who could be on-call for a HVAC company which has several departments. We call one of five people for plumbing/heating, one of seven for electrical problems, and one of nine for commercial and contract companies. And if they don’t answer their page in 15 minutes, call home; if no answer at home, call the supervisor for the correct department. They might get charged $110 for 60 minutes and $1.50 for each additional minute and $15 for account maintenance programming. And they’re thrilled to pay that much if we get it right nearly all the time. Add to all your contracts that your company reserves the right to place the customer at the appropriate billing level. If customers complain that the bill is too high, say, “I’m sure we can lower it. Let’s look at how we can simplify your instructions.”

19. How about a rate decrease? The next big rate increase Focus is going to put into effect is a rate decrease! The billing program will be programmed to capture all the time used in taking a message from “ring to wrap,” the whole time the account is on the screen, even after the caller hangs up. Allan Fromm has done this with his equipment, and he found that about 50% of the total time used, the caller isn’t on the line. Think about it. The time to finish typing the message, read the dispatch instructions, change the person on-call or change from “on pager” to “on call”, all that time will be billable. Rates can be lowered significantly and still increase the income. It will be much easier to sell competitively and much easier to be sure each customer is paying for the labor your staff is performing.

20. Increase you rates dramatically: Let half your customers take their business elsewhere. Then concentrate on giving outstanding service to those who are willing to pay for outstanding service. Less headaches, more money, and a great reputation.

That’s probably the best advice of all! It would be the greatest thing that ever happened to our industry if we all found the courage to do it. It’s the only way I know to revalue our services.

Keep in mind the Focus Motto: Under Promise and Over Deliver.

Charge your customers who call in account changes between 3:00p.m. and 7:00 p.m. and on weekends. This isn’t so much a rate increase as it is a nuisance decrease, but your staff will love you for it.

A Final Note: I’d be willing to guess that today there are fewer message centers in the country than there have been since the beginning of our industry. Yet there are probably as many or more customers available. If we do not increase our rates, and thus increase our ability to buy equipment, keep staff and provide exceptional service, we are doomed to fail or be eaten. Have courage! Raise your rates!

Donna West is President of Focus Telecommunications, Inc., www.focustele.com.

[From Connection Magazine – January 1999]