Jonathan gives his top three ways to raise lawn care prices easily.
I recorded a video some time ago about raising prices. In that video, I talked about how numbers prove that for most companies, depending on your net profit margin, you could raise prices by 10% across all of your clients, lose 25% percent of all your business, and still make the same amount of money. The idea of losing 25% of your revenue because you raised prices 10% is laughable. The odds of that happening are pretty slim, unless your business is just terrible at quality and customer service. The reality of it is that you might lose some number of clients or some amount of revenue, but by raising prices 10%, you’ll make so much more money. I want to cover just a couple quick ways that you could go about raising prices.
One: Rather than raising prices at contract renewal, which is when everybody else is doing it, and all of your competitors are marketing to all your clients trying to steal them away from you, what about raising your prices mid-season? This is one of my arguments against contracts, because contracts are the logical time to raise prices. So, if you don’t have your clients under a contract, it’s so much easier to wait until late summer and do a price increase at that time. What this does is, you don’t have your competitors marketing to your clients anymore. So your client, yes, they could go to Google and do a search and find a new company, but it’s just not as easy and convenient as it is in springtime, or at contract renewal time, when everybody’s pursuing them and trying to get their business.
Two: Raise your prices first on just your under-performers. If you use a system like Service Autopilot, or another system that can do job costing, go through your job-costing report and find your under-performing clients, based on how much money you’re making on that client to service their property, and raise those prices. Oftentimes in business, a lot of what we don’t do, that we never get done, that we never implement, it’s because we don’t know how to do it or we don’t have the confidence to do it. And raising prices is generally a confidence issue. Most of us are scared to raise prices. We’re afraid it’s going to cost us a lot of clients and everybody’s going to get mad and leave. In reality, that’s generally not the case. So, to build that confidence, you could first raise your prices on just your under-performers that you identify using some of your different costing reports in whatever software system you’re using.
Three: Simply raise prices on new clients. You’re unsure about raising prices on past clients, but you’ve at least identified where you’re doing unprofitable work, or where you’ve been under-pricing in the past, and you can adjust your prices that you use to sell to new clients. Then you could raise those prices by 10%.
So you haven’t had the same effect on your business because you haven’t taken a 10% price increase across the board. But, in my example here, taking for example the last two points, one, you’ve gone through and you’ve raised your under-performing clients to make them profitable. Some of them might fall out, but if you lose those, those are the ones that really aren’t so bad to lose, because they might have been costing you money or returning very little profit to your business. Then, the second option that I just mentioned was that you’re now raising prices on new clients, so all work that you sell moving forward is priced correctly at this new 10% price increase.
So, if you don’t have the confidence to raise prices across the board, at least consider those two ideas: under-performing clients and new clients. It’ll make all the difference in your business.