As the holiday decorations begin to appear in stores, you may be mulling over the viability of selling holiday lighting services to your clients. Aside from being festive, this service offering can allow you to keep your staff working during the slower months while generating a good profit margin.
While you may not be able to launch this service this year unless you already have plenty of holiday lights on hand, there are some lessons you can learn from landscape companies that currently provide holiday décor services.
Maintaining Profit Margins
Miriam Hellweg, co-owner and director of maintenance at a Blade of Grass Inc., based in Sudbury, Massachusetts, says they started doing holiday lighting as they were already doing other holiday décor services. She estimates they have around 50% gross profit with their holiday lighting.
Taylor Olberding, co-founder of Blingle! Premier Lighting, based in Omaha, Nebraska, says their gross profit margin is somewhere between 60 to 65% while their net profit is 20 to 30%. He notes that if you decide to rent the lighting products out, your first year’s profit will probably be a little less as you’re paying off the product.
He advises if you decide to rent out your lighting product to keep it simple and use rental inventory software so you know how much product you have and utilize it.
Blanchford Landscape Group, based in Bozeman, Montana, also found holiday lighting provides a strong profit margin.
None of these three companies offer discounts to try to attract new business. Olberding says the only exception is 5% off if a client signs up for an October installation.
“There’s no reason to discount,” Olberding says. “It’s a premium service. Initially, I think we gave a little bit more excessive of a discount, but that just eats into your bottom line year after year. They have an expectation set on price after you do it one time, so we don’t discount as much as maybe we give opportunities to add to their package like a larger wreath or something instead.”
Olberding encourages time tracking and doing a true cost analysis rather than focusing on what other businesses charge per foot of lights.
“If you don’t know your own labor rates or storage rates or anything like that or your breakeven, then there’s no point in asking for that,” he says.
He also notes that you could charge higher or lower than other holiday lighting companies and still make a profit at the end of the day based on your own operating efficiency.
Storage Solutions
One challenge to offering holiday décor services is the question of where to store the products during the offseason.
Andy Blanchford, president and CEO of Blanchford Landscape Group, says they opt to store their holiday décor in storage building units. They tend to group the material by household.
Blingle rents their lighting products to clients. They have an 8,000-square-foot shop to store their holiday lights. Olberding says it’s 80 to 90 percent full. They also store the products by client.
“We have a pretty high retention rate, so in the offseason, we go through the product and everybody’s a soft committal until we get the renewal and deposit,” Olberding says. “Once they say ‘yes,’ then we know to move to a hard committal and then you’ve already gone through the product, so we know it’s good to go. If they move or we cancel on them, or they cancel on us, whatever the case may be, then we pull that box and move all their product to inventory.”
Olberding says they keep tabs on their inventory section of the warehouse daily so their account managers know what products to try and recommend more so they don’t have to buy any additional lighting. He says some customers like to change up their holiday lighting design year after year, while others prefer to stick with the classics.
Because a Blade of Grass only works with residential customers, they have found the best storage solution for them is to keep them at the client’s property as they don’t have a lot of space at their facility.
While a Blade of Grass buys the lights wholesale, the customer purchases the lights from them, so it becomes the client’s property. If a homeowner wants to change their lighting display at some point, a Blade of Grass will purchase the necessary lights for them and sell them to the customer. Hellweg says they have never considered leasing the lights to customers.
Advice for Others
Hellweg says one of the biggest mistakes they made early on was not understanding the electrical aspect of the holiday lighting.
“Not enough power or just not thinking all the way through how you’re going to route all the cords and stuff and how you’re going to attach the lights,” Hellweg says. “That’s probably the hardest part and the timers.”
She advises finding a mentor who can help you avoid making mistakes. Olberding says to take advantage of the training offered by a lot of distribution companies so you can do the installations safely and properly.
Blanchford notes that offering the work can be quite demanding due to the narrow installation window. Depending on your location, crews can deal with freezing temperatures so you need to provide them with the necessary gear to help them stay warm.
