LOWER your prices NOW.... then HIKE them UP!

Now we always talk about raising prices and we're in a big inflationary environment. But today I'm going to talk about how you actually need to lower your price, get a bunch of customers, use up momentum and then jack up your prices. This is a call from last Saturday. It's a great question that was on the call in show. I think you'll learn a lot. Here we go.

So I'm in my second or third year of business. We've been doing well. I've invested a lot into branding, advertising, all at the back end. Now we're of pushing growth. But the, the issue that I'm hitting man is and I kind of have an idea of what you might say to this. But, but the issue is here in easily South Carolina, there's a max population of maybe 40,000 people and I think 20,000 of those people are landscapers.

Just mow each other's lawns.

Seriously. So literally, man. I mean it's, it's, I've counted on like when spring hit a four mile drive, you can count 15 to 20 guys with a truck and a mower in the back. And like I said, there is a differentiation with you know, I have full branded vinyl wrap trucks, professional equipment and everything. But, and I'll see what you have to say about that. But my point is, you know, two years ago when I was doing my research on pricing for, for lawn and landscape and my questions will be separated between lawn and landscape projects, but starting with lawn, um, I saw where you charge a hundred dollars an hour, which I was like wow, that's incredible man. So I, I ran with that and I here, I have not been able to close near as good of rate as you guys are at a hundred. Not saying that I can't. I think my question is should I stick to that? Because that's really where I would like to be, man. And I would genuinely just be discouraged if I have to go down 30, 40% just to get jobs. Um, should I move outside of Eastleigh and extend my route and be willing to drive a little further?

Nothing new with marketing.

What do you think, man?

No, don't do that. Everyone always thinks a different market will solve the problem. It's, it's not the case. All right, so this is, this is the thing. How much do you pay on average to your employees per hour?

It's just, it's solo owner operator right now, man.

Okay, so let me rephrase it, all right? If you, if you had to hire somebody, what would you be charging per hour? Like Is like entry level, very basic services, like mowing up, you know, pushing a lawnmower.

For this market, probably 15 to 17.

Let's just go with 15 per hour. Yep. For an employer, let's go 15. And if we divide that by 100, you're at 15%. All right. My. In my opinion, like, what your hourly rate to the customer is going to be dictated by the. The cost of living in your local area. So in our area, let's just say we charge 80 to $100 per hour. Right. But I also have to pay a minimum of $18 just to get someone in the door and interested. Right. So the cost of living is different. And so I typically don't want what I have to pay an employee per hour to be more than 25% of what I charge the customer. So what that means is you could theoretically go all the way down to 80 per hour and be giving your guys 20 and still make that math work. You could also go down to 70 and still pay your employees 17 an hour. So you using that math. So I think you're just realizing your market. That's why hourly rates and hearing what other people charge has, like, not indicative of what you should be charging. Because cost of living here is nuts. It's like you need to be a millionaire to own a house here. Right. So it's. That would be what I would say in terms of pricing. Don't think it's an area thing because, like, I started in Blaine, Washington, they had like 5,000 people living there. We grew above a million dollars in revenue before ever moving outside of Blaine. And so.

Right, right. And that's of course because of volume, right? Volume cut.

Yeah. And, well, at the time, we were actually doing a lot of projects. We didn't have half as much recurring revenue as we do now. What was driving it was project based work. A lot of big jobs. But also, keep in mind, when it seems like you see landscapers all the time, it is absolutely like the recency bias. It's like if you go buy a Honda Civic and then all of a sudden you see every single Civic or like, like people in the H Vac community, they say the same thing. Like, man, we see H Vac guys all the time. Then you talk to like, window cleaner guys. Oh, man, we see window cleaning guys all. So it is somewhat like, hey, we're biased as landscapers. We're going to notice every single landscaper. But yeah, I think you definitely have room to move your price down because you need to focus on closing the Jobs. And then as your momentum picks up, you get a place like we just talked to Jeff, where raising your prices doesn't move the needle, like, doesn't hurt you at all because you have so much momentum behind you. So right now I just care about you closing the deals. And if you think, if you know that price is the issue, bring your price down. I don't care if you charge 60 per hour. Just get so many jobs on the schedule where now you're like, I have to raise prices. Like, there's so much demand for my services. Again, supply and demand. You just raise your prices.

Right. To pack the schedule full and then raise prices once it's a necessity.

You got it.

Good deal. Okay, so my second question, I guess would be as far as landscape project, kind of, Kind of the same thing, I guess, actually. But I, I guess it's understood that projects are different. And this is what I will say, and you can hurt my feelings if, if this is the case. But my background is horticultural science. All I've ever done is plant science, selective pruning, plant design, things like that is on the side. I'm doing lawn maintenance, of course, for the steady tech. And I'm trying to transfer mainly to maintenance because of the, the reliability and scheduling, which I'm sure you understand. I know you understand because you taught me how to understand it. But as far as projects can, can I demand a higher price? Because I know that the quality and asset of me knowing more is there compared, and I can say this Confidently, compared to 60, 70% of the entry level guys that have done it.

Yeah. Like, theoretically, you're around here anyway, able to offer more value to the customer by having more knowledge. Right. And that should come across in the way that you present your estimate proposal. The way you meet with customers, you need to make sure you highlight those things. That being said, price is not dictated by value as much as the market. The market determines whether or not they value that skill. So don't think from the get like, oh, I should charge more because of this skill I have. Allow you to go out in the marketplace, get so much work that you're like, oh, I can keep raising my prices. Oh, I still have six works. Oh, I'm six months booked out with projects. Raise my price again, allow the market to determine what they value, because value dictates price. But what determines value is the market. And so some people just don't care whether or not you have a horticultural degree. Right. But there's gonna be other customers that do, and they're willing to pay way more if you're able to come talk to them about the, you know, the plant structure and the root structure and the fertilizers and all, how it all interacts. Hey, they're like, my goodness, that guy's the guy we want to use. And I don't care if he's 20% higher. So allow the market, just focus on building that momentum at the initial.

Okay, so the end. And speaking to that, do you think. And I'm okay with this because I'm to the point now where I can take care of myself with the maintenance and jobs I have. Do you think if I demand that higher price, which I do have people committing to, it's a much smaller amount, It's a much smaller close ratio. But I have found those customers. Do you think I should just grow the business much slower while collecting clients that are willing to pay at a much higher value, which honestly encourages me to, to get more jobs? Because slaving in this heat and humidity and everything, I'm more than happy to make more money on less jobs. Do you think I should just commit to that or lower it to again, get more volume? And the second piece of that question that I'll tie in is I'm doing basically 85 to 100 an hour, which I mentioned that I am closing jobs on. But depending on the job, sometimes I would just base it on 500 to $600 profit on a full day's job. Is that acceptable or does that sound ridiculous?

Again, like, what's your goals? Are you trying to grow the business? Are you trying to just make it profitable? Like what? Like do you need an income right now or are you trying to like grow and expand? Like do you want to have 10 crews? Like, what's your goal long, long term current?

Right now I'm, I'm okay with being solo. It is in the plan to get volume cut and then expand the crews to grow much larger. But currently growth is important. But I would say that me making an actual profit at the moment is more important and if I could somehow intertwine both at a healthy rate, that would make the most sense.

Yeah, so I would. If you're trying to do both, like you're trying to grow and be profitable, what I would recommend is a short term increase momentum, get lots of jobs on the schedule, giving you the confidence to raise prices to make better margins and, and then get. It'll get your name out there, you'll get more reviews. Like, it'll get the momentum going. People do not, believe me, this momentum thing. But if you can get. Book yourself out more than a month or two with projects and you got a bunch of mowing coming in, you will have the confidence to raise your price. You will become more profitable by doing that. So I would do short term. I don't care if you go from 85, 100. You're solo. So you don't have a lot of overhead. You don't have a lot of fixed cost.

Yeah.

So I would go out. I'd go to 60 or 70. Book yourself out, and you're like, man, I'm booked out like a month. Like, how far are you booked up right now? You kind of go job, job?

No, man, no. I have room for it, for sure.

Yeah. So I would book yourself up for four weeks. When you hit four weeks, that's the moment you start raising prices. And every single time you get more than four weeks, just keep raising prices per hour that you're charging for projects. Keep the mowing prices where you want them to be at, because it's harder to change those. You can't change them every couple of weeks. But with projects, if you're booking out products because you're horticulturist and you're super good at what you've done, like, I would just be like, okay, I'm gonna start 60 until I'm four weeks out. Boom, 60. All right, now let's go ahead and do 70. Oh, my goodness. Now I'm six weeks booked out. Let's move it to 80. Then you'll move back up into a point where now you have tons of backlog. You have. Now you're charging what you're worth. And then after, say, a month or two, you'll hit the point where you're actually doing work on the jobs that you bid at 80 into a hundred, and that's when you'll have the profit to go hire somebody.

Okay, okay. And then last small question, and I'll let you go, man. This should be fairly quick as far as advertising and actual growth. Been trying to teach myself on Google Ads and Facebook. Does that sound like the right route, or should I be looking at a place? I've done yard signs, we're working on flyers. Where do you think I should. I would get the most bang for my buck as far as advertisement.

Honestly, right now, I wouldn't even worry about advertising as much as closing. More of higher percentage of the jobs, the leads that are coming in, like, if you're at 40%, get to 80% right now. Get momentum. Because right now, especially with project based work, when you're small like you're, you are, you don't have a massive website, you don't have a bunch of trucks rolling around, you're going to depend on so and so that you did a $10,000 job for saying you're the best thing since sliced bread and are worth paying an extra 20% more. You're. They're going to tell their four neighbors. That's what you want to focus on right now. And so I would really go.

Right, well the thing I was going to say, well the thing is, is I, I don't, I could use the lead to fill up. To fill up. So if I were, if, which I do because right now I would actually have gaps in the schedule. What, which way would you say to go to get more leads in? And then I could even cut it off once I'm to the point where it's not manageable on my own.

Yeah. Like I would be looking at all the ways to do it at a lowest cost. Right. So I'd be, I'd be taking every single customer you've ever done work for. I'd be emailing them and trying to upsell them. I'd be going to all of their four to five neighbors. So like we're talking about now, hundreds of people that you can, they're your contacts, they're your leads going out to them. And then I'd be going on next door and Facebook, local groups, I'd be like, those are all the free simple, like just boots on the ground. Because right now I'd rather you spend time instead of money because you don't have work booked out forever. When you're booked out four or five weeks, then you go on Amazon, Google and Facebook and you start pumping leads in from a digital source. But right now you have time. So I'd be focusing on those things that are going to cost less but have better returns, which is going to be. I'd go talk to every, I'd email and call every single one of your past customers. I would then contact via knocking on door and door hanger to every customer around those people's houses.

Okay, good deal. Mike, I appreciate your time, man. Thank you.

Take care.