Tiered Pricing for Energy Audits
We've long been advocates for the concept of "tiered" energy audits (think "standard," "gold," "platinum") for driving revenue and expanding customer bases. Our thinking on this topic stems from a few challenges that will be well known to you, dear readers.
- Energy Audits are not well understood by homeowners, and are further confused by so many different approaches, from clipboard walk-throughs to utility bill analysis to green consultants to un-trained charlatans to infrared drive-by's to online surveys. We're somewhat stuck with this, so it's vital that we define what we mean.
- A quality, whole house audit is an incredibly valuable thing to a homeowner, providing a roadmap of improvements that can last for years. Energy audits are the smartest investment you can make in your house, and we need to put them on the pedestal they deserve.
- One size does not fit all. Even among those of us committed to the whole house concept, there are many deviations to what takes place in an audit based on house size and type, climate zone, energy systems, and various other factors.
- Very few of us are getting fairly paid for true value and time that goes into a thorough whole house audit.
- Pricing strategy tells us that using a tiered approach will cause people to buy up--meaning people will flock to the middle when offered good, better, best options.
With these challenges as our roadmap, here's why we like a tiered audit structure:
It allows you to serve different homeowner needs
People sign up for energy audits for a huge variety of reasons, and it's important to keep that in mind when marketing and advertising your services. Is there a utility rebate people want to take advantage of? Do you serve a progressive, upper-income, environmentally-conscious geography? Is there a popular weatherization program in your area? There may be a combination of any of these factors driving energy audits in the area, and it's not a bad idea to cater to each.
It also serves multiple customer demographics
Another factor that may have some impact on what customers are willing to pay for an energy audit, and what type of energy audit they're looking for, is basic demographics. Upper income or low income? Baby boomer, or new homeowner? Prius-driving, environmentally conscious household, or truck-driving conservative household?
Each of these target markets may be looking for something slightly different, and at different price points. An environmentally conscious upper-income baby-boomer interested in a deep energy retrofit of their Victorian farmhouse, for example, would be more apt to pay a premium for a "platinum" style energy audit that goes far beyond what a typical weatherization customer would be looking for. A lower income homeowner interested in taking advantage of a utility rebate or a weatherization program, however, may be looking for the most basic audit that will offer a path to improved comfort and lower energy bills. In many drafty homes, this basic energy audit could suffice. You don't want to lose potential customers because your one-size-fits-all, all-the-bells-and-whistles, comprehensive energy audit is too expensive.
It lets you differentiate between Energy Audit types
So what would be the distinctions among different energy audit types? It's up to you, but here are a few ideas for a premium energy audit that goes above and beyond the bare minimum "economy" audit:
- Infrared & blower door may be reserved for premium audit (with a basic weatherization audit being strictly visual)
- Full energy modeling
- HERS Rating
- Indoor air quality analysis including mold testing, etc.
- Renewable energy site evaluation
- Electricity analysis (electricity monitoring)
- Filing paperwork for rebates, Energy Efficient Mortgages (EEMs), etc.
- Manual J
- Duct Testing
It positions you as a true expert
Even if you never sell your super platinum version, the fact that it exists and you offer it tells your customers and potential customers that you are more advanced, better trained and different that your average Joe. People may not buy a full HERS Rating, but when they ask you what it is, this is a chance to show your stripes.
It will improve your revenue from audits
A well structured pricing tier will pull customers up from the bottom and grow your average revenue per audit. While customers tend to flock toward the middle when given a "good, better, best" option for a product or service, even one or two sales at the high end will increase your average. Customers who choose the "good" option are likely customers that you would have otherwise missed, because the pricier alternatives are too expensive for them. Allowing customers to choose what works best for them, rather than forcing on them a price ultimatum ("this is the price; take it or leave it") tends to put them at ease and more apt to purchase. The Harvard Business Review has a good article about "good, better, best" pricing with some compelling real world examples from other industries.
Some Companies Doing it Well
Our friend DeWitt Kimball of Complete Home Evaluation Services in Brunswick, ME has taken this route successfully, offering a very basic "consultation audit" geared at DIY-type homeowners, a PACE/Powersavers audit specifically designed for homeowners looking to take advantage of those loans, and an energy modeling audit that includes all the bells and whistles.
Minnick's Heating and Cooling offers a variety of energy audits including a comprehensive "Total Energy Solutions Audit," an energy audit specifically geared towards assessing heating and cooling equipment, and more.
Revival Energy offers a free home energy "review" and health inspection, a basic "comfort assessment" energy audit that looks at heating and cooling, an energy modeling audit, an indoor air quality analysis, and a premium option that combines a comprehensive home energy audit with an air quality analysis.
All thoughts welcome. Do you offer, or have you considered offering, different flavors of energy audits? Feel free to chime in in the comments.