After surviving the pandemic, companies have become stingy about the services they would want to invest in. Landscape maintenance is probably not the biggest of their worries. So how do you break the news about increasing your landscaping prices to these customers who are already iffy about continuing to avail them?
Service-based industries need a very efficient and consistent plan to increase their prices as opposed to product-based industries. It takes a lot of sweat to get the customer to agree to this price change. The provider needs the permission and some major convincing to make a consumer stick with the service.
In this blog, we talk about the most appropriate way to increase your prices and get your customers to agree with them.
Table of Contents
1. Communication is of the essence:
First things first, delivering this somewhat “bad news” to your customers the right way will make all the difference. The communication should be accurate, effective, and in no way misleading. You should always include your contact information and remember to thank them for their continued business and understanding.
Here are a few pointers to keep in mind:
Reasons for the price increase
A very important part of the price increase letter needs to be the reason for this price increase. Inflation, gas/fuel price increase, labor charges, etc. are your go-to’s. But the primary message should be to continue providing quality services to your customers. In the face of rising costs, compromising on services just to avoid asking your customers to pay more can have serious repercussions for your landscaping business.
Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
Get the details right
Before you send out those price increase letters, decide on an amount. How and when will you implement this price increase? Is it going to be a one-time increase or will it be implemented in phases?
We recommend making it a one-time raise, just pull the bandaid right off. We recommend no more than 1 price raise in a year. Knowing the exact plan gives you the confidence to convince your customers.
How to get the message out can be the deciding factor here too. Think about how you usually communicate with your customers. Is it emails, phone calls, regular mail? Or your crew leader talks to them in person during projects?
We advise you not to switch your method of communication and stick to your usual ways to maintain consistency and avoid discrepancies. From what we’ve seen, emailing price increase letters works best for this industry.
2. A test run before the actual dive
Begin with a spreadsheet with all your customers, as documenting everything makes your planning easier. Before going all in, we’d endorse testing the new prices with a selected few customers to manage push-backs better.
Let’s say out of a group of your 50 commercial landscaping customers, you filter out 10 of the oldest and send the price increase email to them. This decreases the probability of a 100% rejection, as these are your most loyal customers. Out of these 10, 8 can say yes and the remaining can say no or vice versa. This gives you a prerequisite and helps you decide your approach better with your remaining client base.
Incremental price increase
If this is your first time increasing your rates, hitting your customers with news of a 20-30% increase would be distasteful. A raise which is 10% or more should be a comfortable window for both the provider and consumer. Think long term as being desperate will cause you more damage than you can think. A minimum of 5% helps you keep up with inflation.
If you’re not new to this, raising your landscaping prices every year sets your customer’s expectations and gives you a strong premise. These increases need to be small as they are consistent. Big increases are overwhelming, period. They result in more pushbacks and attritions which will cost you valuable time and resources.
3. Do not put a pin in it
A delay here can cost you that hard-earned profit. As soon as you decide to increase your landscaping prices, you need to act on it. Begin by letting your customers know. Prioritize the ones who have contracts coming up.
Take note that a 30 day margin before your landscaping season begins is essential here. If the peak spring season starts on the 1st of April, the price increase letters should go out on or before the 1st of March. Think about what you want to prioritize during a peak season. Would you rather give all your attention to the landscaping projects and on-boarding new customers or slog away trying to convince your old customers to agree to your new prices? The worst could be losing them unexpectedly because you sprung a new increased price on them.
Leave no room for price related doubts for your clients, especially right before starting a new project.
4. Manage pushbacks
You will always have those dependable customers who will agree with your new landscaping prices, no questions asked, as they really want your services. What to do about the ones who object?
A handful of your commercial landscaping contracts will be threatened by increasing your prices. But this should not demotivate you from taking this step. Some will use leaving you as a negotiation tactic, which most of you are already aware of.
Most of your price increase emails will not have a response at all. A follow-up over a phone call is required here after a couple of days of no response. Here, add a personal touch to the conversation, make it friendly and then break the news.
A phone call is a great way to make them understand the need for this increase and to get their permission to move forward. Treating them like they’re a brand new customer gives your pitch a more confident and authoritative tone.
Always expect pushbacks. Be confident about your services. We’ve already talked about crisp communication helping you manage pushbacks. The more effective and professional your message delivery is, the less likely the push back. Also, the higher the percentage increase in your prices, the more likely is the pushback.
You can also offer lower-level service packages or add-ons that don’t burn a hole in your pocket just for those extra brownie points. This will nudge your customer to accept the new revised price, as people are likely to grab offers where they get free stuff. Services like adding flower beds and mulch, providing bird control, hedge trimming etc. are inexpensive add-ons that are right up your alley.
Reaffirming your commitment to providing high-quality work – should be your mantra.
5. How to deal with rejection
A rejection is always a tough pill to swallow, no matter the industry. When facing rejection, do not apologize and do not cancel the increase. Thank your customer for their response and for their business.
Let’s also not forget to consider the state of mind of your customer. Inflation is affecting all sectors of the economy, which means your commercial landscaping customer might face financial challenges too. In face of rejection, never compromise your professionalism and confidence. Work on replacing these lost customers and here’s how:
Your marketing strategy can replace the lost customers
A phenomenal marketing strategy translates into you getting promising new leads. Here, your major convincing prowess is used in getting the customer on board and not in getting him to agree to the new, increased prices. These projects will be signed on revised rates. This is how you replace the lost customers with new ones without compromising on your margins.
Sometimes you have to say goodbye and make way for new clients, which is necessary for running a profitable landscaping business. To conclude, do not get greedy with the price increase. Think about it like this: would you pay this if you were the customer and is this price fair for the service you’re providing for the property? If you say yes, it is within the market, then go ahead. Take the emotions out of it and send that price increase letter.
Leave your stories in the comments on pushbacks and successes you faced when increasing the prices.