Capped pricing is powerful pricing.

My family moved this last weekend to be closer to town, in from a rural farm area to a more conventional neighborhood. We had lived in our former home ten years. Over the decade we had accumulated home and yard junk. Wrestling construction debris full of rusty nails and making multiple dump runs in the summer Virginia heat didn’t sound like much fun, so I called 1-800-GotJunk.

The service was great. I called in the morning; they showed up that afternoon, right at the time promised. A bunch of smiling guys in clean blue shirts with a shiny blue truck. They loaded up our farm and house trash piles, swept clean where the piles had sat, and quickly vanished. Kudos to the local Charlottesville franchisee and his team.

One part of the experience that impressed me was their simple pricing with a cap.

When they arrived, they showed me a laminated page with a picture of their big truck. They had simple fixed prices based on the volume of the truck filled: a set fee for a quarter truck, half truck, three quarter truck, and full truckload. The prices were all inclusive: loading, hauling, and disposal. Didn’t matter how long it took them to fill the truck, or what the trash was.

“I’ll estimate the volume up front, and that sets your maximum fee,” the driver said. “If I mis-estimate on the low side and we end up filling more of the truck, you win, as you won’t pay us for the overage. If I mis-estimate on the high side and we end up filling less of the truck, you win, as we’ll only change you for what you need. That sound OK?”

It did. Getting fair pricing, with a known upfront max cap, sounded great as a customer.

While the 800Junk guys cheerfully manhandled broken concrete and lumber into their big truck, I felt gratitude for them taking a hot and messy job off my hands, and I reflected that our paid search management agency has a similar capped pricing model.

For managing paid search on the major engines, we charge a fair price — 12.5% of ad spend — with a known upfront monthly cap. That fee includes professional services and analysis and testing and tracking. We don’t charge set-up fees and we provide a 15 day out, without cause. But perhaps most important, like 1800GotJunk, our clients get a known upfront monthly cap.

Here’s one post about our pricing from our blog, and another from Search Engine Land.

Some folks have told us we’re crazy for capping our fees. That may be so. But our pricing model seems to be working for our clients, and it is working for us, so we’ll stick with it for now.

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