Learn why your lawn service prices should fall in the top 20% of your market.
I get the question all the time: How much money should I be charging for my services? How should I price my services? I’m not going to directly answer that in this video but I do want to talk about a concept that I think is really important.
I have been studying marketing since around the end of 2005. When you start studying marketing, you get introduced to a lot of really interesting people and they obviously teach on subjects other than marketing.
I noticed that what a lot of the gurus in the marketing industry tend to teach is that you should price your services at the very very top of the market. You should be the highest priced provider in the market for whatever it is that you want to sell.
I don’t really agree with that for the service industry and for my service business. That’s the point I want to address. As you’re learning how to price your services and you are working your strategic plan to get to the price point that you want to be in the market and be able to sell a lot of work at that price point so that you can make a good amount of profit, what I believe you want to try to accomplish is you want to be in the top 20%.
If you were to look at the pricing in your marketplace, whatever the service is that you’re selling, look at 50 competitors and write down the cheapest price somebody in your market charges to provide that service, and then write down the highest price that someone in that market would charge to provide that service.
Let’s just use fertilization and weed control. If someone for a 5,000 square foot property would charge $25 to do fertilization and weed control at that property, and at top end of that market somebody would charge $75 to do that service. If you picture that on a whiteboard or on a chart, you want to be pricing in the top 20% of the market. If you were to plot all the lawn service prices for everybody in the market and you were to divide that into 20% chunks, you want to see what the pricing is at the top of that 20% chunk.
I don’t know what that would be in your market, but you want to slowly figure that out over time. You’re not going to figure it out when you first get in business. You’re not going to figure it out on day one. You figure it out over time and as you figure it out, you start to price at that price point.
Now obviously, your service quality, the quality of your people, your customer service, everything has to improve and grow and get better so that you can get those prices. But, I believe that the sweet spot is in that top 20%. Why is that? Because if you’re the highest priced provider in your business, you can’t really build a big business.
If you know me, then you know that my whole concept is to build a business big enough to have somebody that runs it for you. Then, you also have to have a couple of layers so that even if that main person leaves, it wouldn’t all end and you’d have to be the guy running it again.
You want to build a business big enough that you can afford to have people to run the company for you, and that takes a while to get to that point. To get there, if you are the highest priced provider in the market, it’s hard to get enough business, enough volume of business, to build a business big enough to do that.
If you’re too cheap in terms of pricing, you can never hire the right people, the best people. You always have equipment problems and truck problems and employee problems, and you can’t afford to market. You can’t afford to do anything, so then again, you can’t build that business.
That top 20% sweet spot to me is the point that gives you enough money to grow a great company that can run itself and that will allow you to take a lot of money out of the business, and it will allow you to build, again, a big enough business to accomplish everything that I just said.
I’ve started the Lawn Care Millionaire Podcast and I hope you’ll go subscribe to it.
So, here’s what I’m doing. At this point, I have nearly 400 videos and I have been posting the videos to the YouTube channel as well as to LawnCareMillionaire.com. What I’ve decided to do, I’m continuing with my goal of posting 2 to 3 videos every single week and because I have so many videos and the content varies, I have now created a podcast. What we’re doing is, every week we’re posting roughly about 3 videos as a podcast. I’m starting back near the beginning and all of the content is just as useful today as it was when I first recorded it.
What we’re doing is, we will continue to post new content on the blog and on YouTube. The old content, until we eventually catch up, is being posted as a podcast, many times a week. I’d encourage you to go out to iTunes and, I’m going to toggle over there to show you, all you have to do is search for Lawn Care Millionaire. You’ll find the podcast. Click on it and then click ‘subscribe’. If you’re using an iPhone, you can listen to this while you drive, listen to it while you work. If you happen to find a particular podcast useful, you’ll be able to listen to that on your phone or your device several times.
In addition to some of the videos that are out on YouTube and Lawncaremillionaire.com, I’m going to post some content here and there that’s not posted publicly. For example, some interviews that I’ve given, some public talks that I’ve given at conferences, I’ll be posting some of that periodically and you’ll be able to get that on the podcast.
Right now before you forget, run over to iTunes and subscribe to the podcast and I hope you find it valuable.
Listen to this lawn care door hanger critique to optimize your marketing and get more customers.
I am critiquing this door hanger, and giving feedback. Originally there was a phone number at the top left, in the center there was a logo, and at the right there was a web address. Down below it said “call today”. It had a phone number, it said “visit us” and it had a web address. I’ve removed the identifying information, and I’m critiquing this door hanger for an individual. You can listen to my feedback. This is in no specific order and I’m not going from notes. I’m just going to go down through here and give some pointers.
On this door hanger there’s no door hanger hole and I personally think that is ideal. I don’t believe you want a door hanger hole, so I think that’s good. In certain markets you may feel that you need one, but generally I don’t see most door hanger companies using the hole to hang the door hanger on the doorknob. That’s good that gives you more space. In your email you mentioned that on the other side of this door hanger you were going to use some pretty pictures and some imagery. My suggestion would be that you use some imagery on both sides, and also that both sides have some compelling information.
Whether the door hanger has a hole, or you rubber band it to the door, what you don’t know is which direction this will hang on the door or which side will face out. You can imagine that the individual grabs the mail off their door and they walk it to their trashcan in the kitchen. You don’t know which direction your door hanger will be facing as they’re holding that and walking your door hanger to the trash. For that reason I recommend that your door hanger has a headline and something compelling at the top on both sides.
My first thought on this is at the top you have a phone number, your logo, your web address, and so it could be that that’s the first thing I see. But, nothing about that communicates to me what’s in it for me. So, you have just a couple minutes to catch my attention. Your main hope with this piece is that I am in need of lawn care, and when I see this I think to myself, “Well, lawn care’s exactly what I’ve been looking for. I’ll call these guys.” You’re banking on lawn care, and the words “landscape” and “lawn care” to resonate with me because I have immediate need. But, that’s the only way you’d grab me at this moment with this piece.
My suggestion would be that at the top, you have some type of a headline that grabs my attention, and states a benefit to me. That headline could be what you’re going to do for me, what problem you’re going to solve, or some type of promotional benefit of what I’m going to get. Such as, if I sign up for lawn service, I’m going to get a free iPod shuffle or something along those lines to catch my attention. But, you’ve only got a couple seconds to do it, and it needs to be at the top. I’d recommend that same statement to be on both sides because you don’t know which side I’ll be looking at as I walk your door hanger into the house to the trashcan. That’s point number one.
You need to think about what your client’s number one, two, and three wants are, what their top one, two or three fears are, and you need to answer those in the headline. Give them some reason that they should contact you versus anyone else. If I’m your competitor and my door hanger’s on the door with yours, why is yours going to get their attention over mine? You need to have some type of headline that pulls them in, gets them to read, and continue reading this door hanger.
If for your services you have lawn maintenance, landscapes, snow removal, and then you have some additional services down here. I think that is important to call out the specific services that you offer. You don’t have a price on here, anything like that and I think that’s perfectly okay. What you’re doing here is you’re calling out the key services so that if I have a need, I see these and I think, “Oh this might be for me”, and I continue reading. Good job with that. I would continue that. You might try a slightly different design. Let me come back to that, let me mention design.
If you’re going to print ten thousand of these and you’re going to distribute them, you’re going to have some cost. I would recommend spending one or two hundred dollars, or some amount of money, and get somebody to quickly put together the design for you. I know you’re running out of time here, but it could make all the difference in your results. By spending a couple hundred dollars you could potentially double your response rate. I would absolutely have somebody help you with the design of this. The cost could be all over the board. They could lay it out in Photoshop or Illustrator or professional software and they could get it laid out in font. They could use all the same font types and they could make it look really nice for you and bring in some imagery and your logo and make it look like you’re a large operation.
This is not doing justice in appearance to your business. In terms of what you actually are as a business, this doesn’t look nearly as professional as you are or nearly as professional as your website. Your website looks really professional, but this doesn’t communicate that same message. I would recommend having a designer try to bring that same level of look and feel and professionalism to this, so that when I see this I get immediate confidence that this is a professional company. I would spend the money on that. I’ll just focus on copy from here on out.
The reason I said all that is, within that design I would probably somehow bullet point or call out the services here. It’s maybe not the first focus point. The first focus point, the biggest copy, the thing that my eye falls on, should be the headline. Then this would be another focus point, but not the primary one, somewhere on here where all the services that you offer are grouped together. That would be one thing I’d do.
The direction you’re going with an interesting fact, that’s a good one. Your thought process, in my opinion, is good. I hope you don’t take offense to anything I say here in terms of critiquing this. I would go a different direction based on what I’ve learned. I don’t know your market, so it may be different. My hunch is that you’re not trying to convince the guy that doesn’t have his lawn mowed to suddenly start hiring a company to mow his law, or provide whatever service you’re trying to sell. Rather, your buyer is most likely someone that already has lawn care company, has already decide that it’s worth spending the money, and doesn’t need to be convinced; they’re your easiest sell. I would market to them.
For example, if I was competing against you in your market and you gave me 20 home owners that don’t buy lawn care and haven’t in the last three years, or you gave me a list of 20 home owners that buy lawn care and have been buying lawn care for the last 5 years, I would only market to those people and I’d ignore the 20 that don’t buy lawn care. There are a small number of them that will convert and most that do convert may not stay with it long term. I don’t even want to focus my energy on them. You don’t know who those individuals are when you’re putting out your door hangers, so you need to at least craft your message to your most likely buyer and your most likely buyer already has a lawn service.
The direction here is good. An alternative would be to speak directly to that individual that has lawn service now. What is their concern going to be? Their concern is going to be that my gates are not being closed, that the last lawn care company that I had, the one that I’m looking to replace, doesn’t show up consistently, that the company I have now when there are weather delays or problems they don’t tell me what they’re doing or when I can expect them. They just show up, they don’t answer their phone when I call, I never get my invoicing on time, it’s always a different individual at my home and the work is never consistent. You could go down the list of the complaints you’ve heard from your potential clients about the companies they’ve been working with and that’s why they’re calling you. Answer those objections here.
What you’re doing with the interesting fact, great idea, but how could you tell me some of the benefits that I’m going to get. Bullet pointed lists work well on this stuff; it’s easy to read. It’s easier to read a bullet point list and it’s easier for the mind to quickly sort it out then it is to have to read several paragraphs. It might be that you bullet point out some differences and why we’re your best solution.
That’s another point. I would use more of “you” in this. This is about “you” as in the client. When you’re talking, make sure you’re using a lot of words like “you” instead of words like, “we”, “our”, “us”. Try to shift the writing just a little bit so you’re focused on the person that’s reading it, because it’s about them. You might make your headline something like, “You will receive this”, “you will get this”. Something, again, about them, that’ll be part of the headline. Then, make your bullet points, again, something about them. “You will experience this.” “You will get this if you use our company.” List out the ways you’re different than everyone they’ve used in the past. Tell them what the services are that you offer, and then give them a reason to take action with you.
“Spring is right around the corner. We are now booking our lawn mowing accounts for the year. So call today.” My critique here would be yes, you’re reminding them that spring is right around the corner. Again, I hope you don’t think I’m being too harsh. Where I’m going with this is I don’t know if “Spring is right around the corner” is necessary to say. They know it. The reason I say that is, one thing I’ve learned, and I don’t necessarily do a good job at this, is I’ve heard that great writing is about editing out every unnecessary word. I tend to be a wordy person and so I don’t think I’m necessarily good at that. I’m thinking that maybe this doesn’t help sell anything. I would probably edit those words out and focus on just power words and bigger things that you need to communicate because you have limited space.
Where I felt like you were going, “We are now booking our lawn mowing accounts for the year.” You could go a couple directions with this. One, maybe you are trying to say that “We serve your neighborhood and I’ve got one crew available. We can accept 14 more accounts in your market, in your area, in your zip code, in your city, and then we’re filled up for the year.” Maybe there is some angle like that where you can tell me, “You need to respond right away if you want to do business with our company.” At the top you lay out in the headline the benefits of why I should use you. In the middle, you tell me what you can do for me and why my experience with you is going to be different. Why are you better than all your competitors? Then, at the bottom give me a reason to take action immediately. One could be that it’s limited, in some way there’s a limitation. If I don’t take immediate action I’ll miss out, there’s scarcity. That could be that we only have one crew in your market and there are only this many slots left on that crew and we won’t have availability until next year.
Then can you give me something? If I sign up and I become your client, could I get something from you? You have to imagine what those things might be that you could give away, that you’re comfortable giving away. I don’t tend to like things like $5 off, or the second mowing free. People do that and I think it works, but I think you can come up with something little bit more powerful. What is an account worth to you? What could you potentially give them that would be of value to them? You want to work maybe those two things in. Can you create some scarcity? They need to call you right now or they’re going to miss out. Then, what do they get if they call you over the other door hanger?
If I’m looking at these two door hangers and they both look about the same, the companies feel about the same and appear to be pretty good, then why is it that you’re going to get the call over the other one? What can you give them to get them to call you? Maybe it’s as simple as promising you answer the phone and you’ll get them an estimate the day of. That’s pretty difficult to do in spring. Think about that and those points.
I would put your headline and such at the top. At the bottom, that’s where I think our logo, your name, phone number and email address or web address is most important. I would make the top a headline versus your logo and your name. Again, it’s all about them. They don’t really care who you are until after they start working with you and like you. Right now your logo means nothing to them. My logo at CitiTurf means nothing to anybody, nobody cares. What they care about is what they’re going to get and how they’re going to benefit. I make it all about them at the top and then have your stuff more towards the bottom.
Continuing on with your second piece, just a different version. I again, would say that make sure you use both sides. You have room to put copy on both sides of this piece. On both sides you want to have your headline, and on both sides you want to have your web address, your phone number, potentially your logo. Then you could vary the copy in the middle. I’m picturing a headline at the top, phone number, web address, things of that sort at the bottom on both sides, and then the middle could change.
I would like to see, in my opinion, some imagery on both sides. It doesn’t have to be a lot, maybe a nice use of color, things of that sort. I’ve violated what I’m about to say with success, but I tend to prefer black copy not white reverse copy. Not a black door hanger with white copy. It tends to be a little more difficult to read.
Continuing on here. The nice thing about this is that lawn maintenance, landscapes, snow removal, are right at the top. I immediately know what you do. That’s important. Your headline should probably include lawn care or something like that in it, that way I immediately know what you do as I’m walking your piece to the trash. It might make me pause and think, “Actually, I’m looking for a lawn care company. Maybe I should read this.”
A couple things I’d like to see you do on this…105% lawn mowing guarantee, what does that mean to me? What does it mean exactly? It would be nice if you made that guarantee a bit more powerful and said, “It’s 105% money back guarantee!” meaning that if you are dissatisfied with our service and for any reason we can’t make it right, then we will pay you back the full amount of that service that you paid us for, plus 5%. Maybe even with your picture next to it to make it a bit more of a powerful guarantee.
GT Lawns loves cutting grass and it shows. I would say on this one, this is more about you then it is about me. How could you re-position this line to make this to my benefit? Right there you’re talking about yourself, 33 years, that’s okay in my mind because you’re building credibility. Again, this “still having fun” is a little bit about you. Not that it’s bad, it’s just how could you maybe reword this to make it about me and what I get out of this? I get to work with a company that has 33 years of experience, I get to work with a company that has a strong reputation taking care of high profile properties in my local market. What are those big benefits that you can communicate to me and word in such a way that it’s about me and not so much about you? That’s definitely something I’ve learned over time, is make it about them.
I think that talking about your people, your training is valuable. I think that it’s worth mentioning that. I think sometimes we have to be a little more clear on what that means to them. For example, why do I care that you train your people? That’s definitely something I’ve learned. We spend all our time in this business so a lot of times when we picture what we’re saying … for example, we have a visual picture that goes with the words we’re saying such as, where was it, “detail is in the people”. You have a mental picture in your mind of what that means because you’ve been doing this business for so long. But, Mrs. Smith hasn’t the faintest idea what you’re doing and actually thinks what you’re doing is very easy and doesn’t put value into how hard what you do is. The “detail is in the people” might mean nothing to her. Who knows what that picture in her head will be.
Sometimes when you say something like “we train our people”, it’s not so much “we train”, it needs to be repositioned as a statement of benefit, such as “we background check our people” . I would not say it this way but, “We background check our people to protect your family” or something along that line. Background check is the word you want to use but what does that mean to me? What that means to me is that you’re not going to put anybody on my property that you haven’t checked out and you’re not 100% certain that I do not have any concerns about them being around my home, my belongings, or my family.
When it comes to training, what does that mean to me? That means that you’re going to actually close my gates, that I’m going to get a consistently well mowed lawn every single week, there’s not going to be route marks, there’s not going to be debris left in the yard, that the edging is going to be good. What does that training mean to me? You’ve got to almost paint the picture of what that means. State that as a benefit.
When it comes to services, I even like to state the service as a benefit. You can say lawn care, but maybe you want to say something along the line of “beautiful weed free healthy lawn” or “we make your flowers brilliant”, I don’t know, that’s not a good word. How could you state even flower installation in a different way? How could you state flower installation in a different way? Let me add this…you do lawn care, what’s the result of lawn care? You’ll end up with a well manicured, healthy lawn. What’s the benefit of snow removal? It will ensure you can get out of your driveway and eliminate the risk that you slip and fall. Or, however you want to say that. Tell me what the benefit is. You can work the benefit and the word snow removal into one sentence and outline what you can do for me.
I would go back through this, work on some headlines, work on maybe restating some of these services into bullet points. Then I would also think about why you are better than all of your competitors and tell me what those reasons are. Why should I do business with you? Just lay it out for me and then give me a reason. Here you’re making an attempt, our schedule fills up in April, you’re making an attempt to tell me that I better hurry up or you’re going to be full in April. You’re creating some scarcity and reasons for me to take action. Maybe you could define that just a little bit better and make it a little bit more clear to me why your schedule filling up in April matters. Such as, my example I used earlier, you have one truck in my neighborhood this year or you’ve got 14 spots available, do I want one? Historically they’re filled by April 17 every year, or something like that. Tell me why I should take action.
Don’t be discouraged! This video tells you what a lot of entrepreneurs haven’t about trying to grow a landscape company.
Something I’ve been thinking about lately is that there’s an absolute dark side to entrepreneurship and being a business owner. It’s really easy to watch some videos from me talking about where I’m at in business and giving some ideas to help you get there. Maybe you’re reading books by very successful people or watching videos by somebody like Elon Musk to give you ideas to improve what you’ve already got. But, while you are doing that, it is so easy to start thinking, “Man, I’m not there. I’m just not achieving. What’s wrong with me? Why are all these other people able to pull this stuff off? It just seems like their life is so much better and easier.”
What’s missed, I believe, is everybody that’s built a company has been through hell and has been through a lot of hard stuff. Yeah, there are the examples of a few of these individuals that made it on their first try and made it to billionaire status, but that is so incredibly rare. It’s like winning the lottery. The reality is that the vast majority of all of us started with very little help, very little assistance, probably very little money, and not really an absolute plan or the complete knowledge on how to get there. We had to figure it out. We had to struggle. We made a lot of mistakes. That’s the reality of what everybody goes through. That’s what I’ve been through.
I’m in my late 30s. I’ve been working on this for quite a while. I feel like everything really started clicking for me in my late 20s. It’s been getting better from there, but it really took me all these years to learn a lot of the things that I know now. To be able to record some of the videos and talk about some of the things that I talk about, I had to go through a bunch of stuff and had to be frustrated. I had to have money concerns. I had to have doubts and questions and not know how I was going to get my business to where I wanted to take it. I had all of that stuff. I believe everybody does. Trying to grow a landscape company is hard!
The point of the video is, as you’re working through your season, no matter what size company you are because you have problems at every single level, and I’ve said it before, every level you get to in your business means a new thing you have to learn and a new person you have to become. When you go to a million dollars, it doesn’t necessarily mean that suddenly everything’s great. Now you have million dollar business problems. Then when you go to 5 million dollars, that means you better know what it means to be a real CEO of your company and be able to manage your company and be able to run a company where you can’t actually do anything. You delegate everything. Then, when you get to 10 million, that’s another level.
All of that’s challenging and it all comes with pain and frustration and concern and worry and all of that. That’s part of becoming a great business owner. The downside of that is it also isolates you from other people, in some cases from your family, because they can’t possibly understand. There’s nobody to talk to. There’s a lot of stress. That can lead to a lot of mental anguish in a sense, especially early on, if you’re in a really tight financial spot, or if you have employee problems and it’s heartbreaking to have to let certain people go.
That kind of stuff just tears you down and wears you out and you’ve got to be around people that can build you up. You’ve got to be reading things, reading books, that can build you up. You’ve got to be seeking those answers by studying and talking to people and reading. The point here is that’s how you get through it. That’s one of the ways you get through it, but more than that, it’s normal and most people go through it of varying degrees. For some people, it might turn into depression, whereas other people, it just turns into a lot of stress. Everybody deals with it differently. But, I believe almost all business owners go through these extreme highs of, “Yay, everything’s going awesome,” and these extreme lows of, “Oh my gosh, it’s all going to end.” That’s normal.
As you’re working through whatever level you’re at in your business, and you’re working through the hardest part of your season, of your year, and you get beat down, you get stressed out because things don’t run the way they should, you can’t find the people you need, you didn’t sell that big deal and you lost another estimate. When you think about throwing in the towel, you think about giving up, you think about maybe you should have done something else, maybe you should have gone into another industry, maybe you’re not smart enough for this, or maybe you should have gotten a college degree and then somehow you would magically be equipped to do this. Everybody else had to go through that thing just like you.
The point here is don’t let it get you beat down. Don’t throw in the towel. Don’t give up. Don’t say, “I can’t do it.” Rather, figure out a way to be around people that build you up, motivate you, that have been through it, or are going through it, so you have somebody to talk to and just keep pressing on. It’s exactly what you need to be doing. It will one, get you to the next level, both financially and wealth-wise, but what I think is even bigger, two, ability and capability and knowledge-wise, because you are going through the low points and going through the trials and the tribulations and all the stress.
The gist of the video is, just keep pushing on and know that you are not alone. Most people don’t talk about it. Most business owners, you only hear the good stuff. They don’t tell you about all the junk they went through. All you see and hear are the stories of everybody else being successful and it’s not uncommon to say, “Why am I not moving faster? Why didn’t I get there faster? Why are they better and more talented than me?”
Generally there’s a little bit more to the story than that. Keep pushing on.
Should you sell your landscape business? Listen to the video to find out the 4 reasons you should make that move.
I often hear so many people talking about wanting to sell their company. Many people want to build their business for the next three years and then want to sell it. I’m sure I’ve said this in other videos. But, my argument is, if you build a real company that’s capable of running itself for the most part, if it doesn’t require your constant involvement and it makes you a nice amount of money, why would you want to sell your landscape business?
In my mind, the only reasons that you’d want to sell that business is one, you’re looking out into the future and there’s something that’s going to change from a technology standpoint or a market standpoint that is going to potentially seriously handicap your company. Or two, if your company’s worth, say, one million dollars and you currently make $100,000 a year off of that business, you could sell it, take the million less the taxes, and you can reinvest it and make more than $100,000 a year. The math would be you sell the company for a million, you get to keep 700,000. You now can take that 700,000 and you could earn 140,000 a year on that money.
Now, in the example I just gave I think that’s something like a 20% per year return, so good luck with that. That’s not easy. To get big returns like that you’re going to be an active manager in the next thing you’ve invested in. It may even be high risk and you have a chance of wiping out that principle.
A third reason you’d get out of the business is if you just simply hate the business or the industry so much and it’s not fixable, meaning you can’t turn it into a real company that runs itself, or you’re just completely sick of it and unwilling to do it. If you’re just completely fed up with the business and you’re just treading water, the business will eventually end. It will go under, and if you’re not willing to fix that or change that, then you’re probably better off selling the company, because eventually you’ll get nothing for it.
The fourth example is that you’re burned out, tired, and worn out. If you’re not willing to do the work to become a new person, to learn how to be a CEO, learn how to motivate and train your team, learn how to build a real company with some processes and procedures, learn how to do marketing and sales, your company will grind to a halt. If you’re not willing to do some reading, and maybe go to some conferences and network with other people, and really learn the business and learn what it takes to grow yourself and grow your team into the people that you require to be a great company, I would say you’re probably better off to sell your landscape business…maybe even getting a job.
I know that sounds really harsh, but these are the reasons you would sell. The idea of just selling to get a big amount of money, it generally has to be so big that you’re probably not really set. So the idea of selling is generally not the best approach to have in mind. The items that I just gave you, those are the reasons why you’d sell. I’d recommend that you look hard at building a real company that can run itself so that you have no need to sell…unless you just absolutely want to or get offered an insane amount of money to do so.
Watch this video to learn how to set lawn care pricing to earn the most profit for your business.
If you’re watching this video, I’d highly encourage you to watch video number one and video number two if you have not already, because this video is based on the last two videos. And in it, I’m talking about how to figure out lawn care pricing for yourself as your business evolves.
In the last video, what we did was figure out the time for eleven properties within the seven thousand and seven thousand nine hundred and ninety nine square feet range. Remember, we’re using mowing as an example and we determined that our price based on hitting our target of forty dollars per man hour, the price needs to be twenty nine dollars and seventeen cents to mow properties within this range.
So basically what we’ve done, is we went through our business and we just simply tracked our time and measured our properties and we figured out, for all the different square footage ranges, what we need to be charging to hit our goals and we could do this for every service…fertilization, weed control, lawn mowing, aeration and all the different service types. Then, what we do is we basically build out our lawn care pricing. We call it a price matrix in Service Autopilot. It could be just a layout like this for you inside a spreadsheet. We figured out in our business, hypothetically I’m saying your business, that for five thousand to six thousand square feet, you might need to charge twenty eight. And for six to seven thousand, you might need to charge twenty eight dollars. Again, keep in mind, we’re using fictitious numbers to lay out a simple example.
So, just simply lay out something like this for the different services at different square footage ranges. Then, when you go out, you measure the property with a measuring wheel or you go online and you measure it with satellite imagery or pictorial imagery. You can literally look at the square footage, look at your spreadsheet, or if you use Service Autopilot, it will figure out for you based on the price matrix and it will give you a price. Service Autopilot really simplifies pricing and it also helps ensure that you’re always pricing your properties to achieve your target man hour rate.
So, that’s the basic premise of figuring out your lawn care pricing from the beginning so that you can set it and then price off of it from that point forward.
Now, something you might find as your business evolves, you might have originally set prices like this, at twenty eight dollars and twenty eight for this square footage. But, then what happens as it evolves and as your property makes changes and maybe as a little bit of the market you serve changes or the demographic you serve changes, you’re going to notice that maybe you’re starting to achieve a little bit different man hour rates. So, maybe your goal is to achieve a man hour rate clocked around forty eight dollars. So, let’s just go with that.
If you’re trying to achieve forty eight dollars per man hour when you’re mowing, and you’re nailing that on this property right here, five thousand to six thousand square feet. But, now on six thousand to seven thousand square feet, you’re not. You’re more on this forty six dollar per man hour range. So then, you’d probably need to raise that price to about twenty nine dollars to continue to achieve a forty eight dollar per man hour range.
In video number two, we went through and we tracked all of our time and that helped us figure out how much we’re making per man hour. Then, once we figure out how much we’re making per man hour, and we figure out averages across the square footage ranges, we can then really analyze our business and we can really adjust the business. Something we found years ago at our business is, we were really doing okay in this five thousand to ten thousand square foot range. But, as soon as we got into the bigger stuff, fourteen, fifteen, sixteen thousand square feet for residential, we weren’t making money, or, we were not making good money. It wasn’t holding up.
In my example right here, notice what happens, we’re pricing six thousand to seven thousand square feet at twenty eight dollars. Remember that these are made up numbers, these are not my exact pricing and it would be totally different for you and your market. But in my example, notice that, six thousand to seven thousand square feet is priced at twenty eight dollars. We’re pricing fifteen to sixteen thousand square feet at thirty two dollars. But what’s happening on those properties based on how long they’re taking us, we’re only making thirty seven dollars per man hour. Our target in my example, was forty eight, so notice how far we’re under performing.
So what that would tell me as the owner of the business is that, we either need to stop doing properties like these or we need to figure out how to be more efficient. Maybe we need to construct a route that has bigger equipment on it, so that we can go through this type of property faster and we basically group all of those properties into one crew and get through them faster. You’ve got to watch out on the back side though. You could drive up your non-billable time. You might get your per man hour time, you might optimize it and make the per man hour time you want, but then your non-billable goes way up. You may end up with tons of drive time and so you still don’t end up profitable for the day.
There are lots of considerations here and those are things to think about. And, I know that I’m not going to win as much business, but at least when I do win the business, we’re making money and that’s the goal.
And so, the point of this screen here is to show you two things. Once you figure out your average pricing by square footage, you then take that and you set that for each of the square footage ranges. Then over time, you re-analyze your business and you figure out by square footage range, what man hour rate you are earning right now, on average. If it’s too low, you back into it. If you want to go up to earning forty five here, if you want it to go up to forty eight, how much do you need to raise this twenty eight dollar price? And if you watch my video number one, or excuse me number two, and you paused the video on some of my formulas, then you can kind of figure out how, this one here is about raising the price. So you can look at my formulas and figure out how to do this for yourself.
I hope that makes sense. If you have questions about this, post them in the comment section and I will, based on the comments, potentially record additional videos on this topic.
Learn how to set lawn care pricing to earn the most profit for your business.
In a prior video, we were talking about how to price. This is part two. Part one sets this video up and I recommend watching it. We’re talking about the subject of how to learn to price your work versus copying the pricing of someone else. Let’s now look at some actual numbers. There’s a couple of things to know as I go through this video.
One, we’re going to talk in terms of per man hour pricing. How much are you making per man hour? When I’m talking in terms of per man hour here, for example, I could tell you that you need to be making forty dollars or more per man hour. When I say forty dollars or more, that includes their salary and their labor burden meaning the taxes you’re paying them. It would include worker’s comp. It would have overhead things in there such as insurance and truck and fuel and administrative costs in the office.
All of that is rolled into this one number that you need to be making per man hour to pay for that employee, all the overhead that goes into selling the work, and having the office administration support that individual. As we’re talking about these per man hour numbers, that’s what all is included within that number.
Let’s talk details here. In this example, I have eleven properties. First, what we did was, we went out and measured all of our client’s properties and figured out for those eleven properties their gross lot. Let’s just use gross lot square footage. We’re using a mowing example so in video number one we were using a mowing example and I’m going to continue to use a mowing example. For these eleven properties, they all fall within the seven thousand to seven thousand nine hundred and ninety square foot gross lot. I know that’s a small property. I’m just trying to keep this example really simple.
Then, what we did was we went out and we tracked time for all of the mowing jobs that we performed. When the truck arrives, we start the clock. When the crew gets back in the truck, we stop the clock. For these eleven properties, here’s how much time we were on the property. We were physically there for twenty minutes, physically at this property for twenty-three, physically at this one for twenty-one. We ran three man crews, so when you take the time we were physically there, multiply that by the number of individuals in the truck, we had total time at the property of sixty minutes. That means three men were there for twenty so, twenty times three is sixty.
Now, what we did because we weren’t sure how to price, we heard one of our competitors say, “Hey I charge thirty dollars per man hour for a property that’s seven thousand to seven thousand nine hundred and ninety-nine square feet.” Now if you watch video number one on pricing, you’ll know why this is such a disastrous thing to do. Don’t copy someone else’s pricing.
Let’s say you did that. You heard that I said thirty dollars is a good price for seven thousand to seven thousand nine hundred and ninety-nine square feet so you went and you charged all of your clients that have that square footage that price. But, now you’ve started tracking your time and you’ve figured out what you’re actually making per man hour.
Now, something else I’ve said is I believe that at a minimum you need to be charging about forty dollars per man hour, minimum. Now look what happens because possibly you copied my pricing. Once you start tracking time on this job, you made thirty a man hour. On this job, you made twenty-six dollars a man hour and let’s look down here, you made thirteen dollars a man hour on this job. It took you one hundred and thirty-two minutes, over two hours to perform this job. You made thirteen a man hour.
You pay your guys fourteen dollars an hour so you’re not even recovering what you paid them per hour. Not to mention the overhead which includes fuel, the truck, the taxes you’re paying them, and the insurance. So, you’re really losing money. You’re basically paying this client to let you mow their lawn. That’s what happened because you may have copied my pricing and because maybe you weren’t ever tracking your time to know how you were doing.
I say “you” in general, not “you” specifically.
All right, so what’s happened now after tracking these eleven jobs, you’re making an average of twenty-four dollars a man hour. That is not a profitable number that you can build a good business on. I’m positive of that. I don’t care what market you’re in. You’ll see some really low numbers in the commercial business but they just have totally different margins. It’s a different business. But, all of what I’m talking about holds up in residential and in commercial. All of my numbers in red here are the result of copying somebody else’s price and you’ve ended up with basically very low profit margins and probably a business that you don’t love.
Now that you’re tracking your time and you’ve measured all of your properties, you can actually figure out what to charge. For example, if I want to make forty dollars per man hour and I know that that property took me sixty minutes, then I can do a little bit of math and you can see my formula is right up here. If you want to copy this stuff and just pause the video, you can reconstruct this spreadsheet. But, you can see that I need to charge this client forty dollars, not thirty dollars if I want to make forty a man hour. On this client, I need to charge them forty-six dollars, not thirty dollars if I want to make forty a man hour.
If I go through here and work on all of my pricing, it will show dramatic results. Here look at this one. I need to charge sixty-six dollars, not thirty dollars for this property to get myself to an average price of forty dollars per man hour. Once you’re aware of pricing and where you stand as a business, you can start to make some decisions on how to set pricing. If this were my business and I was looking at this, here are some things I would do.
First off, I’m not quite sure what this fifty-three is here so I’m going to delete that. Something is not quite right about that number. The calculation must have been wrong. Oh that’s what it was. I know what I did there. That was actually correct. Here’s what this tells me. If I look at my eleven jobs, then I need to be charging on average fifty-three dollars to mow a seven thousand to seven thousand nine hundred and ninety-nine square foot property. That’s what these numbers are telling me.
If I want to make forty dollars per man hour, that needs to be my price. By the way, for me in my market, that’s way high. I would never get that so my numbers are fictitious. I made up these numbers in terms of how long this took. As a result, these numbers are all false. I could never get fifty-three dollars. In fact, thirty dollars in my market is a high-end price. It’s towards the top of the market for just mowing a small lawn like this. Don’t get caught up in these numbers please, but this is what the data is telling me. I need to be charging fifty-three dollars.
Now, here’s what I would first do. I’ve taken a bunch of properties. I’ve figured out how long they take so that I can figure out what the average amount of time it takes me to do a property of this size. That allows me to find my average pricing. Immediately, I would look at some of the anomalies. This one here, this one here, this one here, and the ninety-nine minutes down here. I would look at these and figure out why these properties take so much longer than all the others. Is it us as a company we’re doing something wrong? Is it that there’s something about these properties that isn’t right? Or is it that these properties are in an area, maybe that they have tons of trees on these properties?
Then I could make some decisions. You can look and see that you just aren’t making money on certain types of properties so you decide not to do those any more. If that were the case and you took your worst performers off the table, now look at what it does. It gets your price down to twenty-nine dollars.
Now we’re starting to get into a more realistic price. I’ve just gotten my poor performers off the table. I either fired or I left the market which probably meant firing them, but I made some decisions in my business and now I’ve got more accurate pricing. Maybe it’s a part of town where you just don’t make any money on properties that size so you leave that part of town and you go where there are more properties like this one and this one. These are properties that I can get through a lot faster, maybe I go find a lot more of those types of properties.
Since I got rid of some properties, I’ve got a new price. I’ve figured out that I should be charging about twenty-nine dollars on average for a property between seven thousand and seven thousand nine hundred and ninety-nine square feet. I set that price and now that’s what we start to quote. Then periodically I come back through here, and if you use ServiceAutopilot, this is on the job costing report. Out to the right you can figure this stuff out. We have a training that teaches you how to do this or you can copy all of my formulas and my spreadsheets and you can figure this out for yourself.
As your business evolves and you optimize the business meaning as you raise prices, you become more efficient, you change your setup, and you change different procedures and training within your company, these numbers are going to change from year to year and you can go back and reset pricing. Another option is, if within seven thousand and seven thousand nine hundred and ninety-nine square feet you just find a ton of variance, meaning that at the top end versus the low end of those seven thousand square foot properties there’s three or four dollars in pricing variance, then maybe you break all of this down into ranges.
You look at all of your properties from seven thousand to seven thousand and five hundred square feet. You plot the time. You put in how much you want to make per man hour and notice again in my formula I have forty dollars in there if you want to copy this, it’s forty dollars. You put in how much you want to make and it tells you what you need to be charging and you figure out your pricing based on that.
Everything I just told you, you can do it for yourself very easily and you can do it for every single service you have within your business.
It’s true. It does take work. It’s absolutely true that it would be easier for me to just to tell you how much you should charge, but look at how dangerous that is. I think it’s impossible tell someone how much they can charge, but it’s possible to give hints and say, “I feel you need to be at least forty a man hour or fifty a man hour or sixty-five a man hour depending on what that service is.” For each service, pest control versus lawn care versus mowing, you do need to be achieving a different man hour rate. You have a different cost for the people. You have a different cost for the trucks that they’re running.
You do need to be achieving a different man hour rate depending on the service and in some cases it doesn’t cost you any more to provide one service over the other, but the market will support a higher price. You should be charging a higher price. That’s the way to think about it.
In video number three, we’re going to move on to looking at setting rates.
Learn how to set lawn care pricing to earn the most profit for your business.
I receive a ton of questions, and I would say in the top two or three is, how do I price? How do I know exactly what I should charge? I think this is the right question to be asking. The dilemma is that I struggle with giving the exact price and here is why.
I can give you exact pricing, but it’s a cop out for me to do that. That’s the easy solution for me. The problem is, I’m very concerned with giving you accurate advice. I don’t want to be wrong. I don’t want to screw up your business, and I want to give you wise advice. Giving you the exact price to charge is not wise advice.
In this video, I’m going to show you exactly why. I’m going to show you the factors that go into pricing and why I can’t give you the exact price. I’m going to tell you exactly how to figure out the best pricing for you. I’m going to show you numbers and how to do it. You’re going to learn how to price. Once you’ve priced your work, I’m going to show you exactly how to figure out of it’s profitable. I’m also going to show you how to figure out your pricing by square foot. Basically I’m going to show you how to do it, and I’m going to show you how you continue to look at your pricing as your business grows.
Now, to do this I’ve got to go through a few points so this is going to be a three-part video. I’m going to go through and talk about pricing, and then I’m going to show you how to do it. I’m going to show you actual numbers.
There are two things to know. One, there are all kinds of services. Mowing, fertilization, weed control, aeration, pest control, you name it. At the end of the day the pricing is all based on time. For the sake of my example, I’m going to use a residential mowing example. This concept also applies to commercial and it applies to every different service type including digging a whole and sticking a bush in the ground. This is the universal truth behind pricing, and that is pricing is based on time.
You and I are in the business of selling time. Let’s say your competitor has figured out in their business that they should charge three extra dollars for every 1,000 square feet for fertilization and weed control. If they’re smart, they didn’t just copy their competitor. Rather, they figured it out based on time and they know that to do an extra 1,000 square feet it takes this amount of extra time to walk it. They spray it at a certain rate and they figured out what that charge needs to be.
I’m going to go through the example based on mowing, but know that square footage pricing is based on time. It’s not based on square feet. You figured out your square footage pricing based on time. That’s important, so hopefully I’ve made my point.
We’re using a mowing example. If you want to arrive at square footage pricing, which is sort of the premise of this conversation, then you want to figure out if you want to price by gross lot square feet, or do you want to price by net or by turf. You might price from one service to the next differently. For example, you might price mowing based on gross lot square footage. Whereas, you price aeration based on turf, and pest control based on the home square footage.
What net is, and this is how some companies price, you take the gross lot square footage and you pull out of that the footprint of the home and maybe the pool. It depends on how your company works. That’s net. That leaves concrete in. That leaves turf in. That leaves flower beds in. That’s something to know and think about as you’re setting your pricing and as you’re figuring out your pricing by square footage.
The other critical thing is the only way you can price is if you track time. Otherwise, your only other options are to guess and copy your competitors, and neither one of them gets you to the place you want to be…a highly profitable business. I mentioned this already. It’s just about the most important thing I’m going to say. We’re in the business of selling time. Pricing is going to be based on time.
Now, one last thing before I get into the details. Let’s say, now you’re wondering how to price fertilization and weed control because there’s product costs involved. The number one item on your P&L sheet, meaning the biggest expense on your profit and loss statement is labor. Labor is the thing that you want to manage above all other things inside the business because it’s your biggest expense. You’re, again, in the business of selling time. When you’re determining pricing, you first start with how long it’s going to take to perform. Then you figure what you have to charge just purely based on selling time and labor.
Now, you can layer on top of that additional things if you’d like. This could be a whole three-hour conversation in and of itself. But, for the sake of our simple example, we figure out that for fertilization and weed control it takes a technician one hour to do a property of a certain size, and we want to make $40 a man hour. That means, I need to charge $40 any time we do a lot of that size. Let’s just put a number to it of 8,000 to 9,000 square feet. That’s not accurate. That’s just my example.
We figure out that when you were doing 8,000 to 9,000 square feet for fertilization and weed control I need to be charging $40. That covers my time, makes a profit, recovers overhead and does all of that. Now, on top of that, I’ve got chemical costs. For that size property I know on average across the applications for the year that I’m going to have an average of $7.50 in chemical cost. My price for that service might be 47.50. I’m making the $40 on the labor, and then I’m recovering my cost on the chemical. You could mark it up. All of that’s up to you. You are setting the pricing. But, that’s the idea. Figure out labor first and then you can layer on top of that your mathematical cost, your product cost, and your chemical cost.
Again, this is going to be a couple-part video because there’s a lot to cover here if I’m going to give you the full details.
Now, why is it that when you ask me what I should charge to provide this service that I struggle with answering that question, and why I feel as though if I tell you the exact pricing I’m doing you a tremendous disservice? There’s nothing that would make me feel worse then knowing that I gave you a price that led to unprofitable work or led to potentially harming your company. Here’s why.
If I charge, let’s just make up a number, $30 to mow a little bitty lawn. I tell you for this size lawn you should charge $30. What does your business look like as compared to my business? I’ve worked on my business. We just turned 10 years old. We’ve been working on our business. We’ve become more efficient. We’ve optimized things in our business. We’ve changed. We are nothing like what we were 8-9 years ago, not even similar.
Think about how many men are on your truck versus my truck? At $30, if I have two men on the truck and you run three men, and maybe the three-man may not be as efficient as two. That means you’re going to be on the property for longer and that means you’re not going to be making money at $30 per visit like I do.
How’s your truck set up? Do you pull trailers? What’s the basic setup? If my truck setup shaves four minutes off of my visit time and your truck setup doesn’t, then I’ve immediately got efficiencies you don’t have. My pricing doesn’t work for you.
What’s your equipment setup? Are you out there with 48″ walk-behinds, whereas I’m there with 21″ mowers? Or, am I out there with a 61″ rider and you’re out there with all walk-behinds? Again, who’s more efficient? If I’m more efficient than you, I just killed you by telling you to charge what I charge because I’ve got a totally different setup.
What’s the frequency? Is it biweekly? Is it weekly? Because in mowing that has a huge impact on how long it takes to do the work. Are my properties all flat, whereas you are in a market where there’s a lot of terraced properties? Are your properties wooded where all of mine are builders that came in and cut down all the trees and planted two new trees in the front yard, so I have virtually nothing to mow around? Is mine flat and you have hills? I’m in Texas after all. It’s pretty flat.
Do you mulch or bag? For example, if I mulch most of my properties and you bag, you’ve just added time that I don’t have.
Are your properties constructed in such a way where you have tons of concrete? That means you have a lot more edging. That means you have a lot more blowing, whereas I hardly have any concrete on my properties for the same square footage because now, yes square footage is the same but we’re performing different services. That means different time. In services, I mean we’re spending more time mowing maybe, whereas you’re spending more time blowing. If it’s super-windy in your market and it’s not windy in my market, what’s that do to blowing?
My point is, I’m belaboring it here, but you get the idea of how many variables there are. What about stick edging? In my market I have to stick edge weekly. What if in your market you only have to stick edge every other week or once a month. What about fences? We have fences. What if you don’t have fences? What if you have metal fences versus wood fences? What’s that mean to weed eating time.
Then finally, what’s the spring effect in your market? How much longer does it take you to mow a property in spring than it takes me to mow a property in spring, based on leaves and all kinds of other factors like the type of grass.
This is why the pricing is literally different all over the board, and copying price is a disaster. This is why I could say I charge 30 for this, and if you’re in Toronto and you charge 30, and everything about the way we operate is different. I really, really did you a disservice.
Now, how do you figure this out for yourself? Because it’s really not that hard. If you want to make a lot of money, than you want to learn how to do this. You’ve got to track your time, period. When you’re tracking the time, you need to know how many people are doing the job. That’s easy. Then you want to have measured the property, measured the gross lot square footage. I’d recommend the turf lot square footage. You don’t have to get out there with a measuring wheel. There are measuring tools built into Service Autopilot and there are measuring tools for free all over the web.
What’s the calculation? I’m going to give you numbers on these other spreadsheets here in a minute, but what’s the basic calculation? Basically, you take the start and end time of the job and you figure out the number of men. Then you get the total time. I’m going to show you what I mean by this. Here’s how you do it.
Let’s just use the example of you’re running a crew of three. You pull up in the truck, you turn off your engine, you write down the start time, or if you’re using software, you clock in. You perform the work. Then when everyone gets back in the truck, you stop the timer. You start the engine, you drive away. Now you have your start time and your end time.
Let’s look at how that would play out. Your property is 10,000 square feet, 4,414 square feet of turf. You are on the property from start to end, meaning they got out of the truck, got back in the truck. Start to end is 20 minutes. I’m keeping the math simple. There were three individuals. The total time on the job was one man hour. You had three men there for 20 minutes. That equates to one man hour or 60 minutes. If you charged the client $30 to mow that lawn, than you made $30 per man hour. If you had been there for 40 minutes, so 40 minutes times three, so you were there for two total hours and you charged $30, then you would have made a man hour rate of $15 per man hour. You kind of get the idea of how the math works. This is the core of pricing every single service.
Now, let’s say that you look at this and you say you’re only making $30 a man hour and you heard me say that you should really be $40 and above per man hour, which is my argument. When I started in the business, I was in the $25 range because I copied a bunch of competitors. Then I was in the 30s for mowing and some other things. I quickly realized those were not good numbers, but I was copying what my market was doing. If you look at your business and say, wait a second, we’re only making 30 a man hour on this property. That’s too low, so what’s your option? Your option is one, to raise the price on that client so that you can make enough money based on the amount of time you’re there. Or, you need to become more efficient and do that property faster.
Where do you find efficiencies? A few of the clues are up here. How many men are doing the job? What’s the setup of the truck? What kind of equipment are you using? Are you picking the right properties, meaning are you predominantly serving a market where the properties are too big or there’s too many trees, whereas if you were to go focus on a different market you could make more money? Those are some of your decisions. All of that goes into pricing.
Now in video part two, I’m going to start showing you numbers and I’m going to show you how to figure this out.