The discussion of money can be a touchy subject for your client base, and in some cases, it may make you reluctant to raise your prices at all.
Jud Griggs, a landscape design/build sales and marketing consultant with The Harvest Group, says landscape company owners should review their pricing at least twice a year.
“You want to do it at budget time, which is about now when you’re setting pricing, you’re developing your budget for the year, and then also a mid-year check to make sure that things haven’t gone off the tracks and things are still as you had planned,” Griggs says.
David Hanny, COO of Virginia Green, based in Richmond, Virginia, says keeping an eye on your costs should be an ongoing practice. Even when they are not in the market for a product, they have regular conversations with their key suppliers.
“Prior to our budget, we try to connect with all vendors and say, ‘Hey, we’re starting to put our preliminary numbers together for ‘24. Can you give us your outlook?’ so we’re not getting blindsided if at all possible,” Hanney says.
Once you’ve calculated all your costs, you can determine if a price increase is necessary for that year.
Communicating Price Increases
How you go about messaging price increases to your customers depends on your personal preference.
Griggs says you can have surge pricing in your contracts, but you need to phrase this carefully, as when prices go back down, clients will expect their payment amounts to return to normal as well. He says you don’t have to necessarily announce to clients every time there is a price increase.
“I prefer not to put up the big banner,” Griggs says. “Let it happen. Clients are pretty astute. They’re going to see the increase and if there are people who start complaining about how much your prices have gone up, there’s some pretty good data out there that shows what fuel has done, what wages have done, what inflation did to us on materials. You can pull that out and say, ‘This is why your prices have gone up.’ Use the data that’s out there to see to solidify your pricing.”
While landscape maintenance companies tend to be locked into pricing for the year, design/build businesses have the opportunity to make seasonal adjustments as they bid on new jobs.
Hanney says unless there are some sort of extraordinary circumstances, they will not do a midseason price increase. Virginia Green always makes clients aware of any price increases.
“Normally, when we are talking about it, we’re talking about how it’s going to impact their price per service,” Hanney says. “For instance, if they’re paying $55 and we have an increase, we’re able to say, ‘Well, Mr. Jones, your cost per service is only going up $2.25 per service,’ not talking in terms of percentages because people don’t tend to do the math.”
If you haven’t increased prices for several years or need to raise them for a specific client by a significant amount, you can do it incrementally over several years so it’s not such a shock to them.
Hanney suggests being disciplined in your approach to price increases.
“It’s okay to take a price increase if it’s done for the right reasons, but on the other hand, if you do a 10% increase every year, you’re opening yourself up to the risk of just pricing yourself out the market,” Hanney says.
