Raising rates

William Prout started his lawn maintenance outfit with a truck, a lawn mower, an old backpack blower and a pile of flyers. He was in business and, like many one-man startups, he was charging way below the industry average. “I look back at my pricing now, and boy was I cheap,” he says.

Prout has come a long way in nine years – a very long way. Now his pricing strategy involves more than covering the cost of gasoline to feed his mower. He pays taxes, insurance, license fees, all the standard expenses small business owners face in the green industry. Prout raised prices years ago, and his business grew as a result.
“I talk to other people in the business, and I got online and participated in some landscapers’ forums to find out what I should be charging,” he says. “I started raising my prices, and customers weren’t going away.”

Prout knows today he’s not the least expensive game in town, but he’s fair. He prices jobs by time, and by now he knows exactly how long he’ll spend on a job to mow, pick up leaves, trim hedges or do other cleanup work a client’s requests. If pricing is off by a little, he will wait until the next contract year to increase their charges, presenting clients with an outline of the work performed and the time spent on their property.

For the most part, customers have not tried to negotiate cost with him. Though of course, there’s the occasional price-shopper looking for a down-and-dirty deal. “I’ve had some people say, ‘That’s way too expensive!’ but I’m not about to come down on my prices when I know what I should be charging for a job,” Prout says.

Price-shocked customers usually are new customers who have never had lawn service before. “So they’re shopping around, and they don’t know what the going rate is,” he says.

Prout will maintain his pricing for 2010, raising it only if he recognizes jobs that required more time than figured into last year’s price. He may consider purchasing another mower this year, which would be an expense he’d need to cover. But this will not affect what customers pay, he says. As for growth, Prout plans to continue operating the business solo, taking on as much work as he can personally handle.

“Over the last three or four years, I’ve been able to retain customers and make a good living,” he says.
Keeping pricing in line with industry standards makes all the difference. “I wish I knew what I should have been charging back then,” Prout says, with a chuckle. That would mean extra money in Prout’s pocket today, perhaps a new backpack blower. But now Prout is on track for profitability, and his customers are pleased with the service and the cost.