Afraid to raise your prices? Read this

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how to raise your prices while maximizing customer retention

One of my clients recently gave some resistance about raising prices. I have been there! It is scary to raise your prices! My advice to him was this:

Q: We sell almost zero new mowing even with rates of $50 – $55 per hour as is, and raising mowing prices by 10 – 15%  has historically caused loss of business. 

A: I know how it is, it’s possible its a little different in your area but I think country wide its the same problem. We have many “low ballers” who don’t have insurance, don’t know their costs, and will price below market. They will then disappear because they didn’t charge enough to stay in business to repair/replace their equipment, or didn’t have insurance and got themselves in financial trouble.

It’s scary to raise prices, but based on my experience whenever we have raised prices it ended up being an overall great decision. The face it you WANT to lose 20% of your customers; these are your headache customers that you’re not making money on that complain all the time. You don’t want the customers that drop you because of price alone. You need to differentiate from your competition otherwise you will always compete on price. You can differentiate alone by being professional, reliable, and having good customer service.

I don’t believe the industry is as cut throat as you think; people have a lot of bills and live busy lives with their children, their jobs, the trash guy, the cable guy, the plumber, etcetera. If you are doing a good job and they are happy they are willing to pay a little more for your services. Would you fire your lawn guy over 5 or 10 bucks? It’s a lot of effort to shop around and find someone else that may be unreliable or do poor work. The only customers that will fire you over 5 or 10 bucks are the price shoppers with the stay at home mom that has time to nickel and dime contractors. These are the same people that have time to call and complain about the “bad job” done every week.

A couple strategies for increasing your prices while keeping while maximizing customer retention:

  1. For new customers, create a “promo mow” service where you perform their first visits for $19.99 (half price, or 2/3 price). After 4 cuts analyze the time data and increase their prices. This has worked well for us (see example service description below).

  2. For existing customers, wait until AFTER their first visit, then raise their price to where it needs to be. The strategy here is that if you raise your prices in February, and the client chooses to shop around, every landscaper has all the time in the world to pick up their phone and send them a quote. Whereas if do the same thing in May, every landscaper is going to be running around pulling their hair out and no one is going to pick up their phone, and most likely their voicemail will be full too! Unless, of course, they are using the RBS phone system 🙂

The promo mow service description we use is below:

Lawn Maintenance – Weekly (4/15 to 11/10) – Cut grass, trim edges, and blow grass off paved areas. Cost per visit. Approximately 30 visits. If the grass height in any area exceeds 6″ on any scheduled visit, the work will be performed on an hourly basis of $85/man/hour. Price quoted is the promotional price for the first 4 visits. The time data from the first 4 visits will be used to determine accurate pricing for your property After the 4th visit is completed, you will be sent an email with the cost for all future visits. If service is not canceled within 48 hours prior to the 5th visit, we will proceed with future visits at the price stated.  

Need help pricing your services? Download our FREE pricing worksheet here

 

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