Are You Pricing for Profits or Pricing From Fear?
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Transcript of Are You Pricing for Profits or Pricing From Fear?
All of us want to make more money, but many of us connect being busy with making
more money. The key is in how we price our services.
Learn how to price mowing when you don’t know how to price!
Correctly pricing your lawn care
services can end up boosting your yearly revenue by
more than $60,000.Two ways to maximize your mowing profits.
1. Scope out your market
• Who are your clients and what can they afford?• Who are your competitors and what do they
charge?• Will your clients pay more for higher quality work?
The first question is the most important. You can tell if your clients are
wealthy, but that doesn’t mean they are willing to pay high prices for
high-quality lawn care.
If you can’t get answers, take
the time to interview a few of your clients that you know will be honest
with you.
You might charge your
clients by the square foot or
by the hour. But you will always
pay your employees for
their time.
Use time tracking tools to keep track of your employees’ time, which also allows
you to track your wages cost.Learn how to figure the most important number in your business.
Overhead costs are the operational costs that don’t directly make you money.
• Fuel• Uniforms• Office staff• Office supplies• Utilities• Marketing
To figure your pricing per service:
• Add the employee wages and materials costs for that service for a month
• If that service takes 75% of your employees’ time, add in 75% of the monthly overhead costs
• Total the time all jobs of that type took for the month.• Divide the total of all the expenses for this service by
the total time the jobs took.• This gives you a break even cost per hour for that
service
Since you know how long most jobs take, you can figure out whether you are pricing
to make money or not.
You might find that some jobs
won’t profit unless you
charge absurdly high rates.
Learn how to raise prices without losing customers.
Your employees will have more
time to perform better-paying
services, which will help you grow faster.
Learn from your mistakes.
Example: After figuring out his expenses, one owner discovered that he wasn’t charging nearly enough to cover his overheads. So, he increased his prices by almost $10, which made a drastic difference. In fact, after that year, he discovered his business earned more than $60,000 from that price increase alone.
Calculate your expenses, know your market, and learn from your mistakes:
these are the keys to getting your prices just right.
Learn more about how to price your services.