Point of Beginning

Dynamic Pricing

May 1, 2010


In Oct. 1998, Travel Weekly published an article by Alan H. Hess titled, “If Airlines Sold Paint.” In the article, which has since been widely circulated on the Internet in various forms, a fictitious airline employee explains the pricing behind the company’s paint, which ranges from $9 per gallon all the way to $200 per gallon. It’s all exactly the same paint. The only difference is when and how the customer will use it.

The absurdity of the situation is obvious. We all get a good laugh from hearing that customers must use the paint on a certain day or be subject to penalties. We shake our heads and marvel at how stupid the airlines are for pricing as they do (especially given the latest trends in fees for luggage).

But perhaps we should instead take a few minutes to more carefully consider why the airlines price as they do and whether there’s anything we as surveyors can learn from their strategy. I’m not suggesting that we price surveys exactly like the airlines. But I do believe we need to reassess our pricing model.

Avoiding the Commodity Trap

The airlines recognize that flying on certain days, at particular times and with a certain amount of luggage is worth more to some clients. Is a survey always worth the same amount no matter how much research it entails, how quickly it must be turned around or what deliverables are needed? I think not. Yet many surveyors perform their work based on “standard rates” without considering the value to the client. Realizing that a survey is a valuable service--not a commodity--is the first step to revising how we price.

With a standard commodity, the perceived quality is uniform from one brand to the next. Bananas are a classic example--few people know what brand of bananas they purchase because a banana is a banana no matter who sells it. Conversely, the quality of a survey can vary widely depending on the surveyor. So why do many clients treat surveys (and surveyors) as if they are a commodity?

For one reason, many clients, especially those requiring residential surveys, often have little or no experience dealing with a land surveyor. Some clients might only need a survey a few times in their entire lives and therefore believe there is little difference from one surveying company to the next. After all, aren’t these professionals required to meet a standard set by the state before they are allowed to call themselves surveyors? Wouldn’t all competent surveyors reach the same conclusion(s) on any particular project? And with surveying procedures and products highly regulated by most states, wouldn’t all surveyors provide pretty much the same end result?

Of course, we practicing professionals know that it’s not quite so simple. But the public generally doesn’t understand how to recognize a quality survey. And, sadly, many professionals reinforce the perception of surveying as a commodity (see the sidebar on page 24).

Focusing on Value

As professionals, we know that not every surveyor is equally qualified. We recognize that not every surveyor will take the proper care with measurements or will do the proper research, and we understand that there can be a huge difference between firms. Sadly, however, we do a very poor job of communicating this message to the public.

So how can we keep clients from treating surveys as a commodity? There are a number of ways:

·           Never provide a price for “a survey” without first doing a good bit of work to determine the client’s needs and the existing tract conditions. There is no one price that fits all. While working to determine the client’s exact needs, you can help them better understand the importance of getting a survey that is custom-built for them.

·           Understand what motivates your clients. If someone else is forcing them to get a survey, they’re likely to be reluctant and distrustful. (A survey required to receive a loan for the purchase of property is a good example.) Such clients are predisposed to dislike you and to focus almost entirely on getting a cheap price. You can try to convince them of the value of your work, or you can refer them to another surveyor who is willing to perform the work at their price point.

·           When talking to potential clients, make sure you discuss all the details of the survey before mentioning price. This tactic gives you time to explain the complexity of the process and emphasize the value of a high-quality product. If you start talking about cost or hourly rates right away, you are allowing the conversation to focus on the wrong details. Value is what is important. Demonstrate that value upfront, and your clients will be much less focused on price.

·           Make sure all written communications look professional. The quickest way to prove you are not worth your asking price is to send out communications with poor grammar on cheap paper or issue a proposal that looks like it was written by a high school student. Being professional cannot be limited to the technical end of your business; it must be reflected in every aspect of your business and your daily life. (On a related note, homemade business cards scream “amateur.” Do not pinch pennies here.)

·           Be unique. A commodity, by definition, is a product that is basic or ordinary. Be different on purpose, and you are no longer a commodity. Of course, there are certain routines and procedures we must follow without deviation to perform our work properly. But when it comes to our marketing efforts and our interactions with clients, we should strive for creativity. One of the most brilliant marketing campaigns I ever saw was a wooden stake I received in the mail. There was no envelope and no packing materials--just a mailing label and stamp. On the back of the stake was a price list and a phone number. This marketing piece was successful because it was unique; it caught my attention and made me want to find out who would mail a wooden stake. (I still buy all my stakes from that company more than 15 years later.)

·           Get involved in your community. The more involved you are in various community activities and community organizations, the more opportunity you have to dispel the notion that surveying is simple or that every surveyor provides the same product. Just about all of us have heard stories of houses being built on the wrong lot or other problems caused by low-quality surveys. Conversations with other members of the community provide a chance to share these stories and educate individuals about the surveying profession.

·           Don’t be afraid to refer clients to someone else. It really is true that 90 percent of your problems will come from 10 percent of your clients. I have always preferred to send those problem clients to someone else. People who insist on a low price even after your best effort to explain the importance of a good professional service are probably best left looking for it elsewhere.

When we price our services like a commodity, clients will treat us accordingly. Only by breaking free of these bad habits will we be able to focus on new opportunities that will allow the surveying profession to soar. 

Sidebar: Commodity Cautions

The following practices are red flags that your firm is pricing surveys as a commodity.

•           Pricing a survey without first determining exactly what the client needs. When a prospective a client asks you what it would cost to survey a local property, how do you typically answer? Do you give them a price before asking questions about why they need the survey?

•           Pricing a survey without doing basic research to determine facts about the site. Do you know all the details about the property in question before giving a price?

•           Giving prospective clients an hourly rate before discussing a project. When a prospective client calls and asks for your rates, do you give them a standard price?

•           Allowing clients to price surveys by answering a few questions on your website. My experience is that every survey is like a tailored suit; it has to be designed specifically for the client, and it should fit that client’s needs exactly. No two surveys are the same. Without detailed information, a surveyor cannot hope to price the project properly.

•           Allowing clients to tell you what they will pay for a survey. Clients often ask one surveyor to match another surveyor’s price. However, clients don’t know all the details involved with their survey and therefore can’t possibly know what it might cost. In many cases, the client doesn’t even have a price from anyone else and is just using an old negotiating technique. Don’t fall for it.