How to Raise Mowing Prices

Hey everyone, it's Mike over@landscapebusinesscourse.com I have some really great announcements today and I want to talk about how to raise prices for your mowing customers. So this time of year, we're going in the fall. When's the best time to raise prices? And then the big question is, how do you raise prices without losing those mowing customers? So before we get in the show though, I want to just share a couple of announcements. Number one, if you're a course member, I want to make sure you know about the new things that are coming on the course. They're on there right now, actually. If you go to the documents and templates section, to the very bottom of the course pages, there's the templates and documents. Go to the bottom of that page and you're going to see the letter that I'm talking about in today's episode about raising prices. You're going to see the example, the letter that we mailed out to all of our customers. So you can see that by going to the templates and documents section, scrolling to the very bottom. Download that PDF and that is the letter we sent to our customers when we recently raised our prices and the one that we're going to talk about today. So you can actually see that, download it, print it off, do whatever you want. Also, if you remember, you're going to want to check out the newest video on the course. So if you scroll down the very bottom of the course, you're going to also see another video. Also in the recently added videos in your dashboard, you will see the new video and it's actually a screen share of, of me walking you through all the newsletters, the emails that we have sent in the past nine months. So you've heard me talk a lot about how important it is to have a CRM. Get the email addresses of all your customers and then on a monthly basis, send them a newsletter. Keep them up to date on what you're doing, what projects you're doing, give them videos and pictures of what projects you're working on. It's a great way to touch base with existing customers and then allow them to see the type of work that you do so they that as you add new services, they can also buy in when they need those services because the last thing you want to do is when you're mowing and all of a sudden another landscaping company comes and installs their paper patio, because that customer never knew you could do that. And so it's a great way to stay in Touch with them. And so what I actually do on this video for the course numbers is you can see I actually show you all nine of ours, how I make them, how I do a thumbnail with a picture, and when people click on it, it goes to the video on YouTube. And so check that out. I share open ratios, click through ratios, how many people are opening up these emails and how valuable it is to us in our company. So check out that video that's also on the course. So that's for all you members. Last update for everybody out there. And that is number one, if you're just listening to the podcast, make sure you subscribe on YouTube or Facebook, because I'm starting to upload a bunch more videos that I can't necessarily see the audio because it doesn't really make sense. It's more visual. So definitely check out Facebook or YouTube. Subscribe. I'm gonna be dropping more content. So, like last week I dropped a video of actually my project manager or my office manager and I talking about how you can actually see us, like live and like actually real life, figuring out our schedule for the day and where we're gonna move all the different guys. There was like, I think probably 10, 15 guys working that day. Wasn't a super busy day. But you can just see how we're trying to figure out where people are gonna be working out which jobs, which trucks, which materials need to go where, figure out the schedule, where I'm gonna be at, where the project manager's gonna be at. And so it's like six or seven minutes long, but you get to see exactly how it's actually operating and how we work. So that was cool. But the reason I really want you to subscribe to YouTube on Facebook is this. There's a new project I'm releasing in the next couple months, and it's gonna be absolute fantastic. As most of you know, last week I was gone for the whole week. And what I was doing is I went to a couple different companies, one smaller company, one larger company, and went there for 48 hours for both of them and tried to just help them increase their sales, generate better teamwork within their company, really build their systems and procedures, and really set them up for success as they scale their business, getting the owners out of the field and things like that. And so we videoed the entire sequence. You actually see the meetings with the teams. You see when I'm speaking with the owners, we go on site on projects. You get to see all of that. I got it all in video. We Got drone footage and some great B roll of them working. So it's great. It's a great project. I want you to really see that. So we're working on the ending process already. We have like 20, 30 hours of video content. We got smashed down into a nice bite sized hour. So definitely keep your eyes open for that. It's only going to be in the video. So that's why I'm letting you know on the podcast to go check that subscribe for YouTube and Facebook. And then the name of that project is also the name. This is something I've not said yet and that is I'm launching a book. And so the book is going to be just for landscapers and it's going to be absolutely game changing. I really, really am looking forward to it. I'm putting a lot of work into this book. And the name of the book is actually the name of the video series. So the name of the video series and the book is going to be called Zero Turn. Really talking about how you can turn your company around and really change it from an unprofitable company to wildly successful and the systems and procedures that have to be in place to do that. So the name of the video series we did two companies, one smaller, one larger. The name of the video series is Zero Turn and the book's title is Zero Turn and they're gonna be dropping, both of those are gonna be dropping in the next eight weeks. So check it out on YouTube and Facebook, those videos and stay tuned for that book. I'm already working with creating the book, whether it be the design of the COVID to we're like I think on chapter four or five right now, working our way through that. So it's a lot of fun, a lot of work, but I'm really looking forward to it. It's gonna type of book, it's not going to be a textbook style. It's going to be a very easy read. More of like similar written link to the E myth where I kind of have to give my 2 cents to an actual company. It's like a novel almost. So it's going to be very interesting. I know you'll enjoy it, so keep your eyes open for that. All of that being said, I had to get all of the announcements out of the way. But now I wanted to share the meat of today's episode and talk about raising your prices for your mowing customers. So you might have been in business for several years. And I see this a lot of times with companies that are 5, 67 years old that have not raised their prices on their customers that they got from day one. And yes, it's very easy to fall into that trap because they're the most loyal to you. They're the early adopters, they're the ones that came to you first. However, over the course of six, seven, eight years, the prices need to increase. The reason for that is because your costs are increasing. The cost of labor has dramatically increased in the past 10 to 20 years. The, the cost of fuel and insurance and trucks and vehicles has dramatically increased. And so to be charging the same prices is just not conceivable or scalable as you grow your business. So what I would encourage you to do is really look at your mowing customers, your maintenance customers, and see which services are most profitable, see which ones are least profitable. So if you're doing mowing, weed control, fertilization and pest control, which ones are most profitable? Maybe you need to raise price on just fertilization. Maybe you need to raise price on just weeding services. And so look at that, number one. Number two, though, is what we're talking about today, and that is when you have a service, we're going to talk about mowing right now, and you have a mowing service, how do you determine which customers to raise prices on? So what we did, and the reason I'm talking about this today is because we have recently raised our prices. Number one, we raised our dollar an hour rate for our landscaping cleanups and all of that. We did that because we are now allowing people to pay their large, large bills via credit card. And so there's been a bunch of credit card processing fees in the past 12 months that we have really just kind of absorbed the cost. So in order to make up for that, again, costs are increasing. You need to raise your prices. This is part of a growing economy. The labor force is costing more. So this is business and it's inflation. And so we raised our prices by almost 10% for our hourly rate, for landscaping, cleanup jobs, et cetera, for mowing. What we did is we did this. We said, okay, these are all our mowing customers. What are we making per man hour on each of their jobs? The only reason we know that is because we are tracking, doing time, tracking of all the jobs. Every time the crew come up to the job, they clock in. When they leave, they punch out. And so we know how many minutes they were there. We know the dollar value for that job that we made. Thereby, we can, we can calculate a dollar per man hour at that job. And then what we can do is in that customer's profile, it keeps track of all their visits and what the average dollars per hour is for that customer and for the mowing service. So what we did is we said, okay, this is the dollar rate we have to beat if people are going to not have a raising of price. We went right through the list, went through every single customer. I actually did it when I was at a fair. I, about three, four weeks ago, went through every single mowing customer really quickly looked at all the underperforming ones, what their prices are now and what they need to become in order to get over the threshold hourly rate that we're trying to achieve. And so it was an eye opening process. We ended up raising our prices on about 15% of our customers, our mowing customers. And these are mowing customers that have been with us for a while. These are customers that we might have acquired from another company, ones that I didn't personally do an estimate for or, or maybe we did a satellite estimate and we're just underperforming on certain ones because there was things we couldn't see from satellite. So anyways, 15% of our mowing customers we are raising the prices on. Now this is the number one thing you have to remember when you raise prices. Because the big question everyone has, how do I raise prices without losing customers? This is the thing, you're losing your least valuable customers if they do leave. So at the end of the day, if those 15% of people left, we really probably wouldn't even lose any profit. We might lose revenue and lose our number of clients, which for some people is a big ego booster. But as far as profitability.

We don't really make a whole lot on these 15%. These are the bottom percentage of people. And yes, there's certain amount of things to talk about when it comes to route density and having those people fill in. And you don't want to cut out 50% of your mo route because they're under a certain dollar ratio. Because now all of a sudden your route is not as dense, it's not as efficient. So there different things, there's other subcontacts you have to keep in mind. However, when we talk about dollars per hour and your man hour rate, if it's under a certain level, you have to raise the prices. And so we had 15% we raised the prices on knowing that if they all left, this is what you have to come to before you raise someone's price. If they all leave, you're okay. With it because you know that they're the least profitable. Or maybe there's literally mowing customers that we might have been losing some money on over the course of the year because in the spring they have really wet grass and it becomes really long and clumping and the guys take three, four times as long to mow it. So you have to get very comfortable with the fact that if you lose these customers, it's totally fine and then you can raise their price. So we took up 15% of these people. Now the big question, big golden question of the day is how do you do this without losing these customers? Number one, you have to be okay with losing them. Number two is there is a way to go about it by raising their price without making it feel horrible and being like mean about it and really trying to save as many of them as you possibly can. So we have raised 15% of our mowing customers. We've raised our prices. That being said, to my knowledge, which there could be a couple more that I don't know about in full disclosure because I'm not always at the office and not always involved with scheduling and routing and I'm not involved with a whole lot, but to my knowledge we've only had one or two customers cancel because of the rate increases. So how did we do it? That is the big question. That's what I want to talk about. So we sent out these letters. We sent out these letters and this is the letter that you can see in the course numbers. You actually see the exact thing I'm talking about right now, the PDF. You can print it off, you can use it, use it as a template, whatever you want to do. We used this piece of paper and we did not send the rate notification in an email. We did not send an email, we did not do a phone call. We did it in an old fashioned printed letter, alright? And I did it on really nice, beautiful card stock color and made it look really nice, very professional. I signed them, I signed all of them and really made it look nice. And so basically what we did is in that letter I make it very clear that, hey, look, number one, I thank them for them, them being a part of our community, our customer base and really helping us grow and succeed. But I just lay out the facts, I don't hide anything, I'm just very plain. And it's a letter from me as the owner. So very rarely do I ever write to the customers in emails or phone calls personally. But in this case I do. I want to make that personal Connection with them. And I want them to hear it from the top of the organization. And so we personalize each letter by putting their name at the top, what their pricing is and what it's going to become. I signed it. So really trying to make it personalized and not just like a mass thing. And so I talk about, I really thank them for being a customer. Then I just explain, look, there's a lot of costs that have been rising, especially with the labor market the way it is and low unemployment rates and our rates for labor have gone through the roof. Just lots of costs have gone up. Insurance. And I make it clear we want to have the best people working for us. We want the best team, the best employees on your property. In order to do that, we have to pay them more, we have to give them better benefits. And so we are wanting to have this level of quality, this level of service. But in order to do that, we have to make a profit and we have to generate a certain amount of revenue. And we tell them, look, we are raising prices on 15% of our customers and we need to do that in order to make sure we're a sustainable company. These are really some of the exact words I use in the letter. We have to do this in order to have a sustainable company. I say, hey, look, I want to be here in 5, 10, 15 years for you. I don't want you to go looking for a new lawn care company every year. I want you to have a place that you can come and know that we are going to take care of you. And in order for that to happen, in order for this company to be sustainable, I need to raise the prices. And so like I said, we've only had a couple, one, maybe two people that I know of that have actually canceled service. Because on those particular people, we literally doubled their price. They were way behind. They were bottom of bottom of our pricing. And so we had to like almost double their prices. And so I understood, and again, we were losing money probably on their property, so what's there to cry about? And when they leave, if the letters written correctly, they leave on great terms. They understand why you were raising the prices. They will go and tell their friends and family, hey, look, they're probably expensive, but they did a great job. They had a great level of service. When they left, they explained why they had to raise the prices. And so this letter is really, really worked well. And so members, you definitely want to check this out. Make a letter of your own. At the bottom. I actually have a picture of Myself and not like a formal picture, I'm actually just smiling, sitting at my truck, just sitting inside my truck with my hand outside the window and just a very close up personal shot of me making that personal connection. And again, we send it in the mail. We give them like two or three weeks notice before the rate actually increases. And so that way if they want to cancel, we give them that right. And we don't try to hide it or anything like that. You only just raise the prices random on invoice and then expect some of them to call back and then explain. That just sounds very kind of like a gotcha moment. So I really encourage you to be very open, transparent, honest about why you're raising the prices and how it's going to benefit them. You want to be that company that is around in 10, 15 years and in order for you to do that, in order for you to scale sustainably and create that high level of service that they need and want, you're going to have to raise the prices and just be very honest and open about that and make it clear that you understand if they need, if they can't afford it, you understand if they have to choose someone else and that you'd be happy to actually refer. We say this, we'd be happy to refer them to other companies that might work better for them, that are smaller, that would be cheaper. And we're very clear and open, honest about that. We're not the most cheap option, but we are a company that's gonna be around in 15 years, that one man band is gonna be cheaper than us, probably is gonna last a couple years and go do something else or sell their company or go under or whatever and so, or go get a job. And so it's not sustainable, it's not something that they can depend on. And in order for us to create that dependability and service, we have to charge that have the rate increase. So definitely members. Check out the rate increase letter in the documents. Check out the video that I made on the monthly newsletters I share, exactly our verbiage, how I make the emails, what our open ratios are. Check that out on the course landscapebusinesscourse.com and if you haven't already, you want to sign up for the course, the conference landscapebusinesscourse.com conference. You can check it out there. Sign up today. It's only $99. It's three days of a seminar with me and in that we're doing something really cool in this conference. I'm going to have the People that were in the video series that I just filmed, they're going to be at the conference. I'm going to have them come up on stage and we are going to have an accountability session and see what they have done over the course of the next three months until the conference. We're going to see what they have changed within their business. So it's going to be great because in a couple months, you're going to see the video of us at their location making changes, making improvements, giving suggestions. And then if you come to the conference, they're going to come live up on stage and we're going to talk about what happened in that video and what changes they've made since then. It's going to be a great time for you to bring a manager to bring a guest, someone that can help you as your number two in your business. An office manager, a project manager, an estimator. This would be a great time to bring them. Unfortunately, right now on the website, you do have to individually apply for each attendee and register each attendee separately. But definitely worth it. The $99 is not even going to cover the cost for us to put on this conference. I'm doing this 100% for you to come to a place where all the entrepreneurs, the business owners there are willing to help give you ideas, give you suggestions and criticisms, bring your financials, bring your website, get ready to actually get down and really dig into your business and get dirty in the details of growing and scaling your landscapers. I can't wait to see you. It's gonna be absolutely awesome. And so thank you again for listening. Check out landscapebusinesscourse.com.