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Content

The Only Times You Should Ever Lower Your Prices

⏱️ 18:30 🎀 Mike Andes
AUDIO EPISODE
The Only Times You Should Ever Lower Your Prices
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Chapters

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  • 0:00
    When to Lower Prices
    Mike Andes introduces eight scenarios where strategically lowering prices can increase profit, cash flow, and control, despite his usual advice to raise prices.
  • 1:13
    Increase Frequency & LTV
    Lower prices can increase customer lifetime value by encouraging more frequent service visits, as exemplified by a monthly subscription model for exterior cleaning.
  • 4:10
    Control Your Schedule
    Lowering prices allows businesses to schedule jobs during off-peak seasons, optimizing crew utilization and reducing pressure during busy periods.
  • 5:57
    Stabilize Cash Flow
    Offering lower-priced recurring services can stabilize cash flow throughout the year, reducing the need for large cash reserves during off-seasons.
  • 7:24
    Use as a Loss Leader
    Lowering prices on an initial service can act as a loss leader, attracting customers for higher-margin upsells, provided a robust upsell system is in place.
  • 9:29
    When Below Capacity
    If trucks, equipment, and employees are idle, lowering prices can increase close rates and get them working, covering fixed costs and generating more opportunities.
  • 11:58
    Reduce Customer Acquisition Cost
    Lower prices can reduce customer acquisition costs and increase close rates, especially when entering new markets to quickly build a customer base and capacity.
  • 15:30
    Increase Online Conversion
    Lowering prices for instant online quotes can increase conversion rates without incurring the cost of in-person estimates, allowing for future upsells and price adjustments.
  • 18:18
    Fill Route Density Gaps
    Lower prices can help fill gaps in service routes, reducing drive time between jobs and increasing overall efficiency and profitability, even if individual job margins are lower.
  • 21:23
    Warning on Lowering Prices
    Mike warns that while beneficial in specific situations, relying too heavily on lower prices can lead to addiction, emphasizing that the ultimate goal is long-term profit and value.

Speakers

M
Mike Andes
Host

Key Takeaways

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Consider offering lower-priced monthly or annual subscription packages to increase the frequency of visits and the lifetime value of your customers, even if the per-service revenue decreases initially.

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Utilize lower prices to control your schedule, booking lower-margin jobs during off-peak seasons to ensure consistent work for your crews and maximize efficiency.

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Implement recurring service models at a lower price point to stabilize cash flow throughout the year, reducing financial strain during seasonal fluctuations and minimizing the need for large cash reserves.

✦

Strategically use a low-priced entry-level service as a loss leader to acquire new customers, but only if you have a robust system in place for consistently upselling them to higher-margin services.

✦

If your equipment and employees are sitting idle due to under-capacity, lower prices to increase your close rate and get crews working, covering fixed costs and generating opportunities for reviews and further sales.

✦

When entering a new market, temporarily lower prices to reduce customer acquisition costs and quickly build a customer base, with the intention of raising prices once capacity is met and service quality is proven.

✦

Offer lower prices for online instant quotes to maximize conversion, as this method has zero cost per estimate and allows you to get more customers in the door for future upsells and price adjustments.

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