Book a free 15-minute coaching call with one of our experienced strategists who have run their own businesses for years and can help you put together a game plan to grow your business in 2023.Book a Call
So you’ve just completed another season of cutting grass and you can’t help but think that you are undercharging some clients.
So you’ve just completed another season of cutting grass and you can’t help but think that you are undercharging some clients. We’ve all been there, and it can feel rough… you bust your tail week after week to provide top notch service, and you should be compensated well for it!
The good news is that you’re the boss and you call the shots. Still, increasing prices can be a touchy subject for some people, so we’re going to walk through this together using a real scenario. Let’s jump in.
The first thing we’ll need to do is decide how much you’ll raise the prices. If you haven’t taken a look at our article called “Do I need to raise prices?” then give that a quick read. We go into a number of factors that can (and should) affect your prices as well as break down how to evaluate your existing prices.
I’m going to give you an example from my business last year when I was raising the prices on a client that was getting bi-weekly (every other week) service at $70/cut. I wanted to raise his price to $75/cut if he stayed at that same frequency but what I really wanted was to get him on weekly service.
It’s ideal to have your clients on a weekly basis for multiple reasons. You’re able to generate the same amount of revenue with 20 weekly clients as you are with 40 bi-weekly clients, but you’re dealing with half the amount of clients. That means fewer people to communicate with, fewer people to collect from, and (most likely) simpler routes. It could also mean that it’s easier to catch up if you get rained out since you might just be able to skip a week.
If you’re not sure where to start, just look at the inflation rate which was 7.5% in 2021. Now, I know people throw this term around, but that means that if you are not charging 7.5% more than you were last season on all of your clients, you are making ~7% less money!
So, let’s say you made $20,000 this past year in gross revenue. With inflation at 7.5%, you need to have gross revenue of $21,500 ($20,000 x 1.075) to make the “same” amount as last year. If you don’t raise prices, you are giving yourself a pay cut by accepting 93% ($20,000/$21,500) of your compensation for the same amount of work! In my opinion, you don’t deserve a pay cut.
Ok, so you know how much you’re going to raise those prices. Now let’s go through some aspects of how you deliver this news.
One of the biggest no-no’s you can do here is to just throw a price increase in the client’s face like you don’t care. We all have clients that we don’t like, and you may have been undercharging certain clients by a good bit, but remember, when you’re a small business you are your brand. How you treat your clients will get around through word of mouth more than you know. It’s up to you to make sure that is positive word of mouth… not negative.
Did you know that over 70% of lawn care operators grow their business primarily through word of mouth? One of the easiest ways to impress your clients and increase positive word of mouth is to communicate in a professional and consistent manner.
To deliver this price increase in a way that maximizes the probability that your client will stick with you, it’s helpful to give a little context. Sometimes, the easiest answer in these times is to just “blame” the price of fuel or the rate of inflation. Other times where it's important to make “adjustments'' in your pricing are when you finally get that insurance you’ve been meaning to get or when you pass your chemical applicators license test 🥳 .
Anytime you communicate with your clients, it’s good to anticipate any questions they may have and try to give them the information they will want up front. Here are some typical things you’ll want to include in your communication.
The Ultimate Price Increase Checklist:
In my situation, I had the client around the right price point, but I knew that price wasn’t the only variable I was negotiating. I emailed my client and gave him two options for the upcoming season. In a way, I didn’t even mention that his price was going up. I told him that it would be $75/cut instead of $70/cut for bi-weekly service, but that I’d keep him at the same price if he went weekly. I then gave him a week to respond and told him I was looking forward to serving him this season.
The best part about this way of structuring these plans is that I’ll increase my revenue on this client no matter which plan he picks. He was paying $70 per cut at 19 cuts per season on the “bi-weekly” schedule which equates to $1,330 per season. Of course he could say “no” to both, but I wasn’t afraid of this since I have taken good care of him in the past.
Below is the way that I laid it out so he could make an educated decision.
Note: I sent this out a little late (early March), so February on the bi-weekly option reflects his old price.
He chose to increase the frequency to weekly which increased the revenue from that one client by over $1,000 for the season. Nice 💪
Ooh, good question. I’m glad you asked.
If you did the math and know why you’re asking for the price that you asked for, then I’m challenging you to stick to it. Why? Because your time is extremely valuable. It should be your goal to increase the value of your time (quality, customer experience, professionalism, etc.) every year and also to capture more of that value from your clients every year (increasing the hourly rates you charge).
And if I may get on a small soap box, if a client gets upset with you at a few dollar price increase, then they don’t care about you. And frankly, you don’t need that type of client in your life. They are eventually going to be the one who takes up the majority of your time and causes you the most mental stress. Just get rid of them!
This even applies to new clients. I had someone come to me last season and try to haggle with me over $3 per cut (smh). Some people would have taken that hit, but that’s not someone I want to work for. If they haggle over a few bucks, then they’re going to cause bigger headaches down the road. Well, what do you know… the other person ended up not doing a good job (and my client’s yards were looking fresh!) and that client came back to me recently! That gave me all the negotiating power.
Increasing a client’s price can be a sensitive topic for the client and a bit awkward for the operator. That’s why most operators will avoid the confrontation and continue providing service at their original price point year over year. The operators who win keep a close eye on what they are charging and aren’t afraid to increase the price when necessary.
I wish you the best as you grow and optimize your business. As always, we’re here to help.