Majority of lawn care companies simply are not charging enough for their services. Being in a position to raise lawn mowing prices without losing your customers – starts with having a good relationship with your clients. Communicating with them and explain the situation. They really don’t care about a $5-10 increase in price. They spend that much at Starbucks everyday. But they will care if your don’t give them a reason why.
I want to talk to you about something that is really common in our industry. That’s lawn care companies not charging enough for their services. This is a really common thing. The reason that it happens is, number one, I think most lawn care companies don’t know how much they need to be charging to make a healthy profit to keep their business running and growing. So number one, they don’t really know their numbers, so they don’t know how much they should be charging per cut. Then they don’t know their margins.
The second thing is, they are trying to compete with low quality competitors. They’re doing that because they’re marketing and their marketing message doesn’t support the reasons why they need to be charging more in their market. Those are the two main things that I see that lawn care business owners should address.
Let’s talk about how you can raise your prices as a lawn care business owner. You have a number of clients and you need to raise your prices across the board. What is the best way to go about doing that? Like many things in lawn care business, it starts with communication. It starts with being able to communicate openly with your clients, having a positive relationship. You need to be able to explain the situation and give them reasons why you need to charge more. Because clients, they ultimately do not give a shit about a five or ten dollar increase in price a week. That’s typically, probably, what we’re going to be talking about when it comes to recurring lawn maintenance services.
Put it in perspective. Your clients are going to Starbuck’s every other day. They’re spending five dollars for a cappuccino. They’re spending ten dollars, they’re spending more than that. It’s not the money. Don’t get caught up on the dollar amount of the increase. That’s not what they’re objecting to. They’re objecting to a price increase for no reason. When you’re going to raise your prices, you have to put it in perspective that a client can understand. If you’re going to say, “We need to raise our prices ten bucks,” “We need to raise our prices five bucks,” and that’s all you say, yeah, you’re going to get push back. You’re going to get people that cancel service. You’re going to get people that call your competitor and leave you.
If you open the lines of communications, if you address the clients about the reasons why you need to raise the pricing, what they’re going to get, how you perform services, how you continue to provide service at an acceptable high standard, how you pay for insurance, all of the things that you have to handle as a business owner. Fuel costs, equipment, all of those things that you have to handle, whether it’s Obamacare, anything else, explain the situation to your customers. They have jobs. They know, they understand that situations change. They know that they can’t possibly be paying the same amount for lawn care that they were paying five years ago. Talk to them on that level. They’re logical if you give them a reason why. Don’t just say, “Just because.”
That’s what I see a lot of lawn care companies do. They want to raise their prices and their response to their customers about why they’re going to raise their responses is essentially just saying, “Just because.” Just because. Of course the customer is going to push back. You have to give them a reason why. You have to explain the situation and put some thought into it.
The other thing I see is lawn care business owners that don’t raise their prices and take it out on their customers. They treat their customers poorly, or they don’t respond to their phone calls because they’re bitter because they’re only making five dollars an hour on that particular client project. It’s not your client’s fault. It’s your fault. You decide who becomes a client. You decide how much your clients are going to pay you. The client does not. So if you’ve accepted a project and you feel you’re not getting paid enough for the project, do not take it out on the client. The client is going to pay what you convince them they need to pay. It’s not their fault that you accepted a project for too little money.
Again, this comes back to communication. You need to be able to have these conversations with your customers, and you need to be able to explain why you deserve to be paid more than Joe Schmoe down the street, cutting lawns for twenty-five bucks. He’s not your competition if you can communicate with your client and explain why you deserve to be paid more than the guy making twenty-five bucks.
Again, this always goes back to really knowing your numbers. You have to know your margins. You need to be paying attention to what your profit margin is on any particular job. Software will make this a lot easier for you to do. Having your employees track their time on a per project basis will give you much, much better information and tell you exactly how much profit you’re making on a particular job, or if you’re losing money on a job. Or if you’re not even running a healthy profit margin. You have to know your numbers youand u have to track this stuff so you can make the best decisions possible.
If you’re not tracking, if you don’t know your numbers, it’s going to be very difficult for you to scale to a million plus. If you look at the big players in the industry, if you look at the big boys that sold their businesses for twenty–five million, that are doing over ten million a year, they know how much each project is making them in profit. They’re watching their margins. They know that they need to be between this percent and this percent, for that to be a good client. That starts with tracking. I really encourage you to do that.
One final point, you do need to test your pricing increases before you roll them out. Don’t just send an email to your entire client base and say, “Hey, we’re raising our prices five bucks this year. Fuel costs have gone up.” That’s not going to work. You’re going to get push back, you’re going to get clients that are going to leave you. I would strongly recommend that if you’re going to role out a price increase, you test it on a small percentage of customers first, starting with the customers that you know have the lowers per project profit margin.
Again, this comes back to knowing your numbers. Start your price increase with the customers that are paying the least amount and benefiting you the less to keep. When you do that, don’t just send them an email. Call them, go visit them face to face. Have a conversation with them. Don’t sent them an email. Because ultimately, you’re going to be selling them. When you raise a price, when you raise your prices, you’re ultimately- it’s a sales call. You’re selling them on why they need to pay more.
You can sell much better face to face than you can over the phone. You can sell much better over the phone than you can via an email. Pick up the phone, call them, be friends with them. Explain the situation. You know? They’re not trying to put you out of business. Open those lines of communication.
Having a really successful business, it comes down to really nurturing those client relationships. Communicate with them on a regular basis. If you’re communicating with your clients on a regular basis, conversations about raising your prices are going to be much easier. It’s also going to be much easier to up-sell them into additional services. I’ve said this many times before in other videos, but you should make it your goal to reach out to your clients at least once a month. Have a personal conversation with them. If it’s not you, somebody on your staff, call them, check in. It’s going to make all of these things much more easier.
That’s my advice. I encourage you, look at your pricing, look at your per project profit and analyze where you need to be increasing your prices. Because I guarantee everybody out there has at least a handful of clients that aren’t as profitable as they should be. That’s your opportunity to squeeze a little bit more profit out of the work that you’re already doing. Go make it happen. Thanks.
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What do you think?
If you operate a legitimate business, price increases do not need an explanation. Prices need to be raised every year from the beginning. If they are a new account and they got a special incentive, make them aware at special pricing at the time of sale and be sure to disclose the regular price. That eliminates surprise.
No one ever explains price increases to me. Insurance, phone, fuel, parts people, vehicle manufactures, the grocery store, never explain a price increase and people keep on buying. Craft beer in NJ is now around $9.99 a six pack. I never had it explained how it got there from $6.99 years ago. If you explain or apologize for price increases, you are making your self all about the price. Huge mistake.
In today’s economy, you need to be raising prices as close to 3% per year as you can make the number. So today’s $30 job needs to be $31 next year. $60 becomes $62. You don’t need to think in $5-$10 increases and then not raise again for several years or to make up for the past.
Any one that complains about those types of raises if you are doing a great job, is not worth having as a customer.