Take off the training wheels.
Whether you're a new lawn care business owner or a perpetually small-time owner, you're probably worried about how you've priced your services.
You want to know that your price is high enough that you can make money, but low enough so that you can be competitive in your market. This is like a walk on a razor’s edge: too much and you price yourself out, too little and there’s no profit.
Copy Everybody Else
This is not something you normally hear on our blog. Usually, we tell you to walk, talk, think, and to be completely different than your competitors. Prices, especially as you enter a market, are largely determined by what everyone else charges.
Go with the flow. If everyone charges around $50 (you can find this out on their websites, their door hangers, etc.), then there’s money in it. Go with the middle to high end of the spectrum you see. If you can, see what equipment your competitors use. If it's not remotely comparable (e.g. push mower vs zero-turn), you probably need to base your prices on businesses that operate closer to what you do.
Warning: don't price match lowballers. If a business scrapes the bottom end of a market, they're probably not the one that has it figured out. They snag clients with low (read: unsustainable) prices and go under in a month.
Related: 7 Ways to Beat Lawn Care Lowballers
Get it Right from Day One (or Today!)
Once you’ve sold some lawns, you want to ensure you actually make money with the price structure your market uses. Set yourself up for success and outpace competitors: track your time.
I can’t emphasize enough how important this is. Track. Your. Time. The best way to track time is with the Service Autopilot app. If you don’t use our software yet, use the notes app on your phone. Just track them somewhere. The most important numbers in your business are the amount you’re paid per hour of labor sold.
Revenue ÷ Hours
If you charge Mrs. Smith $50 to mow her 1500 sqft lawn and it takes you an hour and a half to mow it, you make $33/hr.
If you charge Mr. Jones $50 to mow his 1500 sqft, tree-filled lot and it takes you two and half hours, you make $20/hr.
Time is the heart of your business. In a densely populated market, aim for $40 per man-hour so you have room to grow.
Same Size doesn’t equal Same Price. Same time equals Same Price.
If you don't track your time, you won’t have any idea that you make less money on Mr. Jones’s job. If you don’t have the information, you can’t make informed decisions on what to charge clients (or if you should take on the client at all).
Once you know how long your jobs take and what you make per hour, you can look at what makes your “problem properties” similar.
You might notice that lots with a bunch of trees take longer or that Mr. Jones keeps his back gate locked and you have to wait for him to open it and put his dogs away. This lets you price appropriately when you renew services with him next year. You’ll also know this when you price new customers, so you can quote a higher price to deal with the trouble or realize that they’re more trouble than they’re worth.
These are the Basics
- Track your time from day one.
- Convert that time data into revenue per man-hour.
- Use that data to discover properties that do not make you $40+ per man-hour. Figure out what’s the same at these properties and update prices accordingly.
Time Tracking is the fundamental building block for intelligent price decisions. Guts and instincts are great, but they’re no replacement for informed decisions made from good data. Track your time, so you can know that you’ve priced your services appropriately. Tracked time equals more money in your pocket.