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Will you make money as the market improves?

Aug 13, 2013
You see, we are all very nice chaps, us removals lads and lasses. We look after our customers, polish our trucks, send or mums flowers every March and have, for decades, failed to charge enough for what we do. It’s an industry disease. By Steve Jordan

Let me give you one simple statistic.  On my first day working in the international moving industry, in August 1974, I was given the job of checking the rep’s quotes for moves to Australia.  My boss told me to divide the price by the volume and it should be about £2.50/cu ft.  “If it’s not, come to me and we’ll work out why,” he said.  Do the same exercise today and what figure would you be looking for? £5.00?  £5.50 maybe.  In 40 years the price has just doubled!  Can you name me one other service-based industry, involving manual labour, bought in materials and fuel, that has risen in price by less.  I doubt it.  And we weren’t making a fortune in 1974 either.


Some of the prices I hear people discuss in the domestic market too seem to me to be totally bonkers.  A few hundred quid for moving a three-bed house half way across the country?  No, I don’t think so. Not with the average price of a home in the UK being around £250,000 and back on the rise again. 


But the trouble is that most movers seem to be totally incapable of dragging the pricing off the bottom rung.  I know that the cost of market entry is low but surely the established companies can use their initiative to command a premium for what they do?  People often say that ‘the customer won’t pay’.  I don’t believe it.  They could afford £2.50 a foot to move to Australia in 1974, when they’d sold their home for about £7,000, so they can definitely afford more than a fiver now.  However the customer won’t pay more if he cannot see any benefit in doing so.  Why should he? It’s our job to make him understand the difference between the service he can get for peanuts and the one he really needs.


I was chatting with Eric Bourne from Bournes in Rye the other day.  He agrees that, now the business is returning, the market is improving and people are beginning to feel a little less impoverished, it’s time for a different attitude to pricing. 


“Recovery to the industry is a long time coming following what is commonly regarded as the most difficult and prolonged recession in living memory,” he said.  “Now, media reports have suggested things are getting better and the housing market does appear to be on the up as phones start to ring again with new enquiries. However, before we all get embroiled in the mad rush to convert those enquiries perhaps we should take a breath and spend a few minutes looking back at the experiences of the past six years.”


Eric said that during this time, in order to survive, many movers secured business by setting and negotiating prices downwards, whilst their cost basis has been steadily rising. For example fuels, materials, business insurance, vehicle insurance, vehicle repairs and maintenance, legislation, legal compliance, pension costs, professional fees, quality standards, rent, rates and many other small and hidden increases.  “A buoyant enquiry line will provide us the opportunity to recover these increases, not forgetting that we need to allow for higher staff wage costs as employment prospects improve if we wish to retain good, experienced staff.”


He also compared movers to vehicle manufacturers.  “If you ask any of your local commercial vehicle dealers for the cost of a Euro 6 chassis cab the price will increase £10-12k against a Euro 5, and it’s apparent that all manufacturers are sticking together to recover investment cost. Is it time that professional removers follow suit and stand firmly behind realistic pricing to protect our business rather than roll over and pass all the benefits directly to the customer whilst we struggle to survive? Is it time to change?”


Many would say it is time for a change and agree with Eric that failing to pass on price increases to customers makes little sense.  It seems to me that it is not the customers who need educating, it’s the movers.  Most people don’t move often, so they have little idea of the costs involved.  If we tell them the costs are low, they accept what we say.  Similarly, if we say they are higher, they’ll accept that too.  They can afford to pay.


The problem is justifying the difference between the higher price and that quoted by, for example, a new entrant to the industry.  I ask: if you have invested in new facilities, new vehicles, first-class training, ISO standards and value-added services without having identified what benefit they are to customers and what they are worth, then have you really thought this through?  You should be clear about the benefits and, therefore, you should be able to make your customer understand too. And, in a way, the closer your price approaches that of a van and man operator, the less the perceived difference in the quality and the value of service.  So, vive la difference!


So, as the market returns, should we all not throw away the old baggage from the past that tells us we are not worth more?  Should we not have confidence that we provide an extraordinary service that is worthy of its just rewards?  Or shall we just carry on cutting each other’s throats until the next recession arrives?

Your thoughts please.     



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