After a hectic and decidedly unexpected 2020, looking ahead toward spring 2021 brings two key questions: How will COVID-19 affect lawn care pricing? Should you raise or lower prices? Despite COVID-19 and the profit/loss you may have experienced in 2020, you can still make 2021 a profitable year and win more clients. You just need the right knowledge and tools under your belt.
How Does COVID-19 Affect Your Pricing?
Before diving into how lawn care ser-vices should be priced, you first need to understand how COVID-19 will affect pric-ing next spring. Now, more than ever, it’s important that you’re properly pricing your lawn care services, especially during the upcoming lawn care season. Considerations should include:
- Replacing any clients you lost last season.
- Rebounding from last season if forced to close for a period of time.
- You need to address your cost. Despite the economic downturn, your cost of doing business may be higher due to increased marketing and technological investments to make your business contactless.
Additionally, potential clients may be more discretionary with their spending and will expect you to be more mindful of taking precautions. Realign the business growth goals you had for 2020 with your goals for 2021. Revisit those goals and decide what’s feasi-ble for next year. Realistically, you can still expect to rebound from 2020 with proper pricing; however, depending on how heavily your lawn care business was impacted, it might take some time to fully recover. Keep in mind that just as you were forced to make some difficult cutbacks in 2020, so did your clients—be it commercial or residential. As a result, you’re still going to be impacted by COVID-19 in 2021, but that doesn’t mean you can’t rebound and grow.
Should You Raise Or Lower Prices?
Whether or not you should raise or lower your lawn care prices is hugely dependent on your business. In other words, there are many factors at play that are specific to you:
- Was your pricing right to begin with?
- Do you have higher or lower costs than last year?
- Did you have to make any big cutbacks or major purchases?
Factors like these (and more) will play into your prices. All of that being said, you should NOT raise or lower prices just because of COVID-19. Here’s what I mean: Don’t skyrocket your prices because you want to rebound from a profit loss in 2020. Alternatively, don’t lower prices because you want to win more clients to rebound from 2020. Instead, evaluate your overall costs and desire for growth in order to maximize your value and set the right prices. Here’s four key considerations:
1. Track Each Mowing Time. By tracking how long it takes you and/or your team to finish each property, you’re able to pinpoint which properties are the least and most profitable. For example, say you have two properties on quarter-acre lots and you charge them both the same. Property A takes you 20 minutes, while Property B takes twice as long because it’s on an incline. If you’re tracking, you know that you need to either double what you’re charging client B, or you need to drop them. By consistently tracking the time to mow every property, you can ensure you’re always meeting your goal revenue per hour. Whether using a stopwatch or software, tracking time is mandatory to ensure profitable jobs.
2. Be Aware of Your Local Competitors. While you should never copy competitors’ prices, you do need to be aware of how much they’re charging. It will give you an idea of how much potential clients are willing to pay. Watch to see which competitors are most successful and find out why. Do they provide high-quality services? Do they have an amazing reputation? What makes them so special? Once you know what sets them apart, look for ways you can be better.
3. Calculate Your Operational Costs. If you want to reassess profit margins for 2021, then you’ll have to maintain accurate calculations of operational costs. This includes everything such as: fuel; drive time; insurance; equipment maintenance; lawn care software; and labor (if solo, set your salary). Once you’ve added all your operational costs, you’ll know your break-even point. By keeping tabs on this point, you’re ensuring that no matter what, you at least won’t lose money on jobs next year. From there, you can determine how much profit you want to make.
4. Test Your Lawn Care Prices. Many of your competitors will calculate their operational costs and then aimlessly add 5% or 10% for profit… but you can do better. Don’t undersell yourself. Track your data to find the profit holes in your business and where you can make more money. Consistently evaluate your prices with these practices:
- Send surveys for pricing feedback.
- Re-evaluate your prices on a regular basis (monthly or quarterly).
- Consistently maintain high-quality services to justify higher prices.
In addition to evaluating your prices, make sure you’re setting growth goals every year. The right goals can help you accurately determine your percentage for profit.
Raise Least Profitable Clients First
No one wants to pay more. So if you raise prices, you’re going to get some pushback. Try raising prices on least profitable clients first. Use this as a test for new pricing before rolling it out to all. By testing prices on a small group, you can work out the kinks so you don’t lose high-profit clients. With this strategy, if you lose clients, at least they weren’t the most profitable. A word of caution—don’t try raising prices during the height of the selling season when competitors are trying to poach clients. Instead, when you announce the price increase, “resell” your business to your clients. Write a letter explaining the rising costs of doing business, but remind them what makes your services different. Also, let them know you care about them and value their loyalty.
The key to rebounding from any financial hardships wrought by COVID is to maximize profits without pricing yourself out of the market. Focus on consistently evaluating prices and only keeping profitable jobs.
Sanders is a marketing specialist at Service Autopilot where she helps lawn care and landscaping business owners grow their businesses. Service Autopilot offers a free downloadable lawn care pricing audit here.
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