Landscapers Debate: Should You Share Your Pricing Strategy with Customers?

Hey everyone, it's Mike Andes and you're listening to the Landscape Business course podcast. Today we're talking about price transparency and we're clearing up some of the confusion and debate around last episode on price transparency, sharing your hourly rate, sharing your prices with your customer. And I hope we can kind of clear up my point of view that we shared on the last episode. Alberto, thank you so much. On the Facebook group, landscape business course Facebook group, he made a comment and he actually posted two videos. One was the last episode where I talked about not sharing your hourly rate with your customer. And then he posted the other video that I made a couple probably a year or so ago about price transparency, sharing your prices with your customers, making it very public, and why that's positive. So today I'm going to talk about both those things. Why I'm not contradicting myself, but I want to clear up what I was saying on the last episode and make sure you understand what I'm trying to say. Again, this is just one man's point of view. I get on here and talk about my point of view and the way I see things in this industry based upon what I talk about with a lot of different landscapers, what I see from all the franchisees at Augusta Lawn Care and what I've seen work, but just one man's point of view based upon my experience. And so you can take it, you can leave it, you can kind of use it to push against your pre kind of conceived ideas or ways of looking at things. So it's a very good discussion and debate around these things. A lot of the stuff I talk about is subjective and also a little bit debatable. Like open book management, there's a lot of people who disagree with doing that pay for performance. A lot of people disagree with that, something like this, like sharing price transparency. So these are all great topics. And again, it really has to do with like, if you're going to make a business that's different and stands out and attracts great people and is going to be different than everyone else in this industry, you're going to have to do things that are out of the box. And if you're going to retain a great team, make a great team culture, you're going to have to do something like open book management. You're going to have to have pay for performance. And I think to really stand out in terms of customer service and honesty and transparency. Price transparency is a huge part of that. So I just wanted to kind of clarify, like, number one, I get on Here I sometimes talk like it's gospel truth, because to me, it is like Pay for performance. P4P Open Book Management, things like price transparency, things I talk about, they're very real to, to me, and based upon the hundreds, if not thousands of landscapers I've worked with, those are the things I see as truth. But definitely it's great to challenge those things. Use your own ideas to really balance out if it's right for you. So just wanted to kind of put that little caveat in there. I know I'm young, I don't have 40 years of experience in this industry, so I can always be wrong, and I'm open to people challenging me on these things. So I thank you, Alberto, for kind of bringing up this topic because it does seem at face value that I might be contradicting myself, but I want to clear that up and really clear up my point of view on these things. So price transparency, I want to make it clear. Price transparency. I did make some notes because I want to make sure I covered my thoughts today. Price transparency is not rate transparency. Okay? So what I mean by that is a year ago I made this video, and I still believe it today. It's not like I changed my mind because that you should be able to transparently share your prices with your customers. Now, when I said that, I was making a statement about being able to share what your prices are around mowing, around your landscape jobs, without trying to hide that information from the customer. What I mean by that is not trying to hide the fact before the customer even calls you about how expensive a project's gonna cost or how expensive is it cost to have their lawn mowed? So, for example, we share our prices like a rate matrix based on square footage as a general guideline for the mowing prices that our customer's going to see. It's a general guideline because it could be more, it could be less based upon all the variables. And we have that in the document that we send them about pricing. Like it says, there's a bunch of variables. Your pricing is going to be around this number based upon your square footage. However, there's a bunch of things that can move that number around, but we're trying to give them as much information as possible in terms of, here's a round estimate before you even call us, of what you're probably gonna be charged for your mowing. But here are all the variables that are gonna move that number. And then they become educated. They understand, like, okay, I know it said $45 per cut based upon my square footage of my lawn. But I know that you had all these variables and I know that I do have really bad access. I have a gate going in my backyard. I know there's a lot of edging with a curved flower beds everywhere. So I understand why it's 50, right? So educating the customer, giving them all the information that's necessary. Because if someone thinks it's gonna cost 100 dol and then they see.

On your pricing page or however you share that information with them, that's where it'd be probably like 40, 50, 60, they think that's a great deal. On the flip side, if they think that that cut should in their mind is like, oh, it's gonna be like 15, $20 to get my lawn mowed. And they go on there and it's like gonna be. They can tell it's gonna be like 45, 50, $60 to get their approximate square footage cut. Now you save the time of not even having to deal with that customer. Cause they realize like, oh, this is a more expensive service than I anticipated. I'm not even a call. I'm just going to do the lawn myself. That saves you your office time. It weeds out the tire kickers from even asking for an estimate. The same thing goes for projects. So when I talk about price transparency, if you go on to. Actually, I'm going to show some. If you're watching the video, I'm going to show some pictures right now, like bing, bing, bing, bing, right here of different jobs that we have done. And we show the exact price to get that job completed. We show before and afters and then we show, hey, here are the before and after pictures here. Exactly what they spent. So that way, if there's a paver job that costs $5,000, someone looking at our social media, looking at our website can be like, oh, my patio looks a similar size. I like that design. My product's probably gonna be around $5,000 if I want Augusta Lawn Care to come install my paver patio. Now what that does again is if they thought it was gonna be 10 or 15, they this is a great deal. I'm gonna go call Augusta. If it's. If it's way above, like if they thought it was gonna be a $500 project, it saves my time, estimators time from going out the office from having to set up the appointment. All of that is saved because now the price transparency has weeded out the people that have completely unrealistic expectations of what that paver patio is going to cost. So it saves you time, it saves the customer time, and it makes a lot more efficiency on that end. It also shows that you don't have flexible pricing. You're not making up pricing on these jobs. They can see that, okay, if they consistently showing their prices on these projects, they can see a theme. They can see like, okay, it's costing between 4 and $8,000 for these paver patios, depending on size, depending on if they're really long and straight, like a pathway and curvy versus just a big square rectangle in the middle of a lawn. They can start seeing and putting those pieces together so that when you give them the estimate, you can literally show them these other jobs. Like, these are the prices for these ones, and this is where yours kind of fits in because of X, Y, and Z. And so they start realizing that your prices are exact. They start seeing that, like, oh, it's not $9,000 for this paver patio. It's $8,736. And they see that on a piece of advertising, a piece of content that we've shared publicly with everyone. In other words, we're not ashamed of our pricing. We aren't cowering down from a price. We know what we need to charge to have a sustainable business with a sustainable profit margin so we can stay in business for years to come and service your property like, there's nothing to hide. We're not making 80% profit margin. It's not like a pharmaceutical company. We're just raking the dollars in. And so we are very open and transparent about those prices. We share those. We're happy to share those. What we do not share is our rates. The reason we don't share our rates is not because we. We're trying to hide stuff. We're not trying to hide something from the customer here. The thing is, if you shared your hourly rate with your customers, it caused more confusion, and you have to do a lot of explaining as to why you have to charge that amount. So, for example, especially if you're charging over $50 per hour, it's very difficult to educate a customer why you need to charge that, because you have overhead recovery involved wrapped up into that hourly rate. You have office staff, and you have everything to do with gas and fuel and insurance and wear and tear. And there's just so many things that have to be covered inside of that hourly rate. And so to share that hourly rate with your customer, you're gonna literally have to explain to them a ton of stuff for them to Realize that, like, it's not just labor. It's not like, oh, if I charge you $60 per man hour and I give my guys $15 per man hour, I'm just magically making $45, like, 75% profit margin on that. It's not how it works, and you all know that. We as business owners know that. But trying to educate the average consumer on that is very, very difficult and time intensive. I'd much rather be able to sell a job being like this. Hey, Mr. Jones, it's gonna cost you $4,256 to get this paver patio installed. I'd much rather show that price versus the product he's going to get and say, and basically ask him, is this worth the transaction? Is this dollar value worth this paver patio? And then they have to make the decision whether or not to buy. I'm very transparent. I'll share this number publicly if needs be, but that $4,256, I'm willing to share that with whoever, however, whatever. But if I then try to tell Mr. Jones, Look, Mr. Jones, it's gonna be a $4,256 project, but instead of just telling him that I share them, oh, by the way, we're gonna charge $100 per man hour on this project. They'd be like $100 per man hour in their mind. Again, they're thinking that you're paying your guys $15 or $20 per hour, and then you're just making money hand over fist. What they don't take into account is the drive time to and from the supplier, the setup from your office to get those supplies ordered, all of the communication between the supplier, between the project manager, between the office, between the customer getting that product correct, what type they want, which color they want, the designs, driving to and from three times to confirm things they do not. They're not going to think about those things. And so I'm not trying to hide anything. I'm trying to keep from over, like, giving way too much information and confusing the customer. I want to make it very simple. I'm happy to share that price, that overall price with anyone and whoever, but I'm not going to break it down to the hourly rate. Now, if someone asks you, can you break this down? Like, you get a project and like, hey, can you break this down to time and materials? We will do that. We will actually take a job, and we will tell them exactly how much is set out for labor and how much is set out for materials. We're not going to break it down beyond that. We're not going to break it down to like, okay, there's X amount of hours for this part of the project, X amount of this for. And we're charging this rate for this and this rate for that. And then we need a, a material markup of 25% here. And then the plants we charge like we're not going to do that. If that customer wants that information, they're not the right customer for us. That type of customer is going to be watching over the shoulder of our crew the entire time. They're going to be tracking the time to see exactly how much money we made. And that's not the type of customer we want. We want the type of customer that looks at the dollar value, realize that it's a very good deal compared to our competitors, that we're going to be considerable amount cheaper than, than another competitor around a project and realizing that the value and the level of customer service we have is also superior to those competitors. And the reason we're able to do that is because of pay for performance and the efficiency that we created. And really making sure that all the money we spend on trucks and equipment is centered around the customer experience and not just bright shiny new things. Like I'm willing to explain that all day long to my customer. I'm not gonna share the rates. They, the rates they will not understand. It will lead to a lot like they just do not understand the cost of doing business. The average customer, the average consumer is not going to take into account the fact that you have overhead and insurance and fuel and all these other things involved and wrapped up into that hourly rate. Okay? So I'm very, very confident that our prices are not just competitive, but lower than our local competitors. And it's. When you use P4P, you can become very efficient in doing that. I know that our prices are standardized, so I'm willing to share them publicly. But we're not going to break down to the hourly rate. If I told customers that we charge 60, 70, $80 per man hour to mow their lawn, they would freak out. However, because I know we're so efficient, I know I'm going to charge $25 for the cut. And in the customer's mind, $25 is a great deal to mow their lawn. Alright? So that's what I want to clear up. Price transparency, not rate transparency. We never share our rates with the customer. We will break down materials and labor. Again. This is one man's point of view. This is how we teach it at Augusta Lawn Care for the franchisees. This is how we've always operated locally and this is what has worked. If you have a customer that wants you to share your rates and your markup and all these other things, that's not the customer we want. And maybe one in a thousand, one in five hundred at Augusta wants that information. And they're not going to be a good customer to work for. They are going to be watching over your shoulder. They're going to be squeezing you on every penny. They're going to be counting the plants. They're going to, they're going to be doing stuff that you are going to drive your crew crazy. They're not going to be able to be efficient on P4P. So, like, these are things you want to think about. I just wanted to make sure that I covered everything. I hope that cleared things up. Price transparency, not rate transparency. Sharing your hourly rate with the average consumer will only confuse them and you will have to explain so much if you start sharing your hourly rate and charging by the hour. And so, and especially if you, like we talked about in the last episode, if you're wanting to do P4P, if you're wanting to incentivize your guys to work faster, if you're wanting to incentivize them to have great customer service and get jobs wrapped up before budgeted hours, if you're charging by the hour, it completely defeats that. If you're charging the customer based on an hourly rate, it defeats that purpose of trying to be more efficient. If you have a set budget hours and you have a set price that you're able to share with the customer. Be very transparent about know exactly what the price is before the job. That price never changes, regardless of the issues, the weather, all the other variables. If you stick to that, then your guys have an incentive to go and get efficient. Go push the extra mile, get the job finished a little sooner. And so these are things that I think about, these are things that make the difference in our market. The demographic that we're going after is wanting to see a transparent price. And like, so like I said, if you're watching the video, you saw the pictures on Facebook and stuff, we share the prices for our jobs. I don't care if a competitor sees our prices like, that's fine. Price transparency is nothing but help you. This is the same thing around open book management. Sharing your information with your employees will only do you good. It will only do you good. Regardless of whether you're making A bunch of money or losing a bunch of money, it will only do your employees and your culture good. So I think the same way that you need to create trust and transparency with your employees, you need to create trust and transparency with your customers. And I do not believe that keeping the hourly rate away from them is trying to hide anything. You give them the prices, you give them the exact price. You don't deviate from it unless you there's work change orders and things that are different or added on the job, we never ever increase the price. If something unexpected happens and it takes the guys an extra 10% longer on the job, we never do. But we also don't reduce the price. When our guys figure out an efficiency, figure out a way to make things work faster and get the job, kill it, beat the budget hours. I want them to be able to make more money. I want them to be able to be so concerned about finishing on time and the customer super happy with the experience they had with us. That's what I want them to be motivated by and charging by the hour and giving an hourly rate to your customer completely defeats all of that. So I know this is a controversial subject. Some of you will disagree. Some of you will think that I am trying to hide something from the customer, when in reality it's information that is going to only confuse the customer. If I share the hourly rate, share the price, be very open and transparent about the price. And we even are open and transparent about our markup on materials. If we're marking up on the materials, we'll tell them, if we're just charging them exactly what we're getting from the supplier, we, we will tell them we're open and transparent about that. There's nothing to hide. There's a lot of backend work. If you're getting material and setting that up with the supplier and all of that and getting delivered like there's a lot of work behind that. You can be open and transparent about that with the customer. But when it comes to hourly rate, they will. Most customers will not understand why you're charging 60, 70, 80 plus dollars per hour to do simple landscaping work on their property because they can go on Craigslist. And then you get someone for $15 an hour, you, they can get someone to pull weeds for 15 bucks an hour or $10 an hour from someone from the high school. You do not want to have to educate every single customer why you're charging 50 an hour. Because you have insurance and you have gas, you're licensed and bonded insured Just give them the dollar amount for the job and take value what you produce versus price and leave it up to the customer to make that decision. Be open and transparent about the price, not the rate.

I hope that's clear. I hope that in the comments below let me know what you think. I know some of you are going to disagree, but that's totally fine. That's what I love about these discussions. Thank you so much everyone. Thank you for listening to landscapebusinesscourse.com definitely real quickly. Actually, I'm not getting paid to say this. Gusto sponsors Business Bootcamp podcast and a lot of people have really benefited from using their software for direct deposits, payroll, time tracking, all of that. If you want to use it, you can use it for 90 days completely free if you use the link they gave me. It's Gusto G-U-S-T-O.com Bootcamp so this is actually from my other podcast. They don't sponsor this show at all, but I know it's helped a lot of people. So try it out if you're looking for a solution for time tracking, getting your timesheets done, submitting payroll, all of that benefits, all that good stuff. So try that out. It's 90 days completely free. Gusto.com Bootcamp thank you so much everyone. Look forward to next episode where we can talk about something different than price transparency. But thank you for the discussion, thank you for the dialogue and make sure sure you go to Landscape Business Course Facebook group for more on this discussion. Until next time. Be great because nothing else pays.