Every landscape contractor would like to be able to charge more for their services. Who wouldn’t? The reality is, landscape contractors don’t charge enough for their services. Recent benchmarks say the average landscape company loses money each year. It’s also a sad reality that many contractors feel that they’re trapped in this ‘race to the bottom’. If you’ve ever told yourself…
- If I charge more, I won’t win any work..
- Clients are already telling me I’m too expensive.
- I just lost a recent big job to a competitor who won it for far less.
… then you might well find your company already running in this ‘race to the bottom’. Associations are working to help educate and train the industry, but it will be a long time before anyone can shift an entire industry. Until we get there, here’s a few different ways you can charge more this year, and still thrive in this competitive industry.
Know Your Pricing, and Refine the Details
I’ve written several articles on the value of a running your business from a budget, so I’ll keep this point brief. Knowing exactly how much your company needs to charge is essential. Maybe you don’t need to charge more…maybe your crews need to do more work in less time.
There are 2 more valuable benefits to pricing using your budget. First of all, small changes can mean a big difference. If I ask a group of 40 contractors “What do you charge per hour for labour?” most will answer with a very even, round number. $40/hr or $50/hr. Very rarely will you hear something odd… or something with change. I’ll almost never encounter someone who says: “$52.45”/hr. The fact is, small changes can add up to a big difference. Just adding 50 cents an hour on a 10-employee, $1M company would increase your net profit by about $10,000 or 1%.
On each job, it makes a tiny difference. But over an average year, for an average company, it could buy you a great website, or a nice bonus for you or your key staff. The point is, you should know exactly how much you need to charge because every little bit counts. If you’re worried about customer perception, ask yourself who you’re hiding your hourly rate from? It’s not often that we ever show it to a customer on an estimate, so who is really going to care whether your rate is a nice round number? Even if you show your rate, you’ll have the confidence to explain how you arrived at that rate and confidence wins negotiations.
The Wallflower Goes Home Alone
The same scene’s been played out 1,000 times in the movies. There’s this nice guy who’s smart, good hearted and well intentioned stands against the wall, staring at a girl who’s his crush while the not-so-good hearted alpha-male steps in and sweeps her off her feet. In the movies, the good-hearted kid usually goes through some sort of redeeming story and wins the girl over, but if that happened more in real life, well, they wouldn’t be making movies about it.
What does this have to do with price? Your value isn’t just about what you do, it’s about how people perceive your value, and in the construction/service industry, perception is everything. Relying on the story that “We do quality work” is like the wallflower at the dance standing there hoping that his redeeming qualities win over the girl. Everyone knows he’s a better “catch”…but the girl goes home with guy who looks like the better catch. Even stranger, the alpha male gets the girl even when the girl knows she “shouldn’t”. It’s human nature to be persuaded.
The same principles that win that at the prom can also help you charge more and still get the customer.
- A killer website is like your reputation. It shows your work, your brand and is getting checked out constantly without you knowing it, or being able to defend yourself. If you’ve ever said to yourself “Our website could be better”, then make it better! If you’re saying that to yourself, your customers are leaving your site to spend more time on a better one, and you’re not there to defend yourself.
- Sales meetings – when you meet the customer, impress them! Want to charge more? Look like you’re worth it. Show up on time (even a bit early!). Dress well, drive a clean truck, have a folder to leave with the client. People want the cheapest price might get turned off… that’s OK, those aren’t the people who are going to pay more anyway.
If you believe you’re worth more, you need to act like you’re worth more. Strut your stuff. Go out on a limb. Ask for the work with confidence, or you’ll end up like the wallflower at the dance – a great catch, that never gets the girl they deserve.
Re-frame What You’re Selling
Some customers are looking for the best value/lowest price. But most customers don’t actually buy that way.
Nike doesn’t advertise that their shoes won’t fall apart after a year. That’s because, most customers don’t buy shoes for durability…they buy Nike shoes to look good/get compliments, or because they believe that these shoes are going to increase their athletic performance.
There are hundreds of cars on the market. If ‘longest lasting’ was the customer’s biggest concern than the most expensive cars would have the longest warranties. Ironically, it’s the opposite. Kia’s and Hyundai’s try to relieve quality concerns with the industry’s longest warranty, while high-end brands have some of the industry’s shortest. Only a few customers buy the industry’s ‘best value’ car. Most customers spend more money for different reasons. Here’s a few ways you can sell to those reasons:
- You’re ahead of the curve – better/more efficient lighting, outdoor-sound systems, ‘green’ equipment, methods and products
- You’ll improve their social status – hot-tubs, seating/gathering areas, outdoor kitchens
- You’ll impress their neighbours – unique features/design, unique plant material, perfectly manicured lawns and gardens
- Your after-sale service is best-in-class – how can you enhance their property after the sale? What if they have questions about how to care for their garden? What can you offer, in writing, that’s different than your low-price competitors
- You will improve their quality of life – your designs or services will save your customers time (e.g. less household maintenance), enhance their lives (e.g. more family time), and long-term expenditures (e.g. heating bills or water usage)
- You’ll improve their financial status – better looking properties drive more sales + traffic and help your customers charge more, safer conditions in the winter = more customers and higher sales
Question: Which architect is designs the most indestructible homes and buildings?
Answer: Nobody cares.
The top-paid architects command big dollars for creativity and innovation. People can buy a reliable house kit off-the-shelf at Home Hardware.
Shoes market on these different levels. So do cars, watches, clothing, even something as simple and competitive as coffee. Why do people pay $5 for Starbucks coffee? Hint: It’s not that their caffeine is any better.
If you want to charge more for your services, there are thousands of examples of companies creating their market all around you. You also have an incredible opportunity to create this market…people are actually interested in what we do. Gardening is a popular hobby. Nobody’s hobby is life insurance, building codes, or furnace repair. What we do interests people. Increase the value of your services by stroking their interest, and by reading your client’s unspoken needs correctly.
Nobody expects that there’s a high risk that their patio will sink after 2 years, or that they’ll need your insuranceDon’t spend too much time competing over this. Shift their focus to something that nobody else is talking about, something that will truly excite your customer.
Easy as A-B-C… Always Be Closing
And finally, one more way to ‘sell for more’ is to upsell your current customers – they’ve already bought into you and your company. You need to help them increase their investment.
Maintenance contractors should inspect properties regularly and send customers ‘reports’. Check conditions of plant material, concrete, drives, signage, retaining systems, drainage, visibility… you shouldn’t be able to find a property that doesn’t need some enhancement. I recently met a contractor who challenged his supervisors to a contest…each would inspect properties and upsell these improvements to their existing clients. The winner would be determined by who could generate the most invoiced revenue based on these recommendations. The winner won… with over $70,000 of work sold as a result of those inspections.
Construction contractors shouldn’t try to upsell everything up front. The initial budget can quickly exceed the customer’s comfort level, then they get scared off, or embarrassed (that they can’t afford to approve more of your suggestions). Give them what they want up front…then introduce some ideas once you’ve got the job and as the job progresses. Get the ‘while we’re here’ incentive working for you. Share some ideas for some enhancements that would really benefit their yard, then explain how it would save them money, cost and hassle to do it now vs. later. Like every other sophisticated marketing plan in the world.. capture your customers with your initial offering, then make some good profit on upsells. It’s a model that works.
