How To Choose A Pricing Strategy For A Lawn Care Business

Setting the right pricing is one of the biggest challenges for any business. This applies not just to startups but also to firms with many years’ worth of experience. If you set your prices too high, you risk losing potential customers. If you put it too low, you risk suffering losses to the detriment of your business. (1)

If you’re running a lawn care business, you already know how challenging it can be to give a well-thought-out quote. It’s not like pricing a product, where you designate a fixed price for a particular item. For a lawn care business, every job is different from all the previous ones. This brief guide gives you tips on selecting the best strategy when pricing lawn care services.

• Prepare accurate quotes

The first step to getting your pricing right involves breaking down the expenses incurred by your business in order for you to provide a lawn care service. Typical expenses include:

• Paying your employees
• Overheads, such as phone bills, office space, vehicle fuel and maintenance, and internet
• Material purchases
• Taxes

Once you’ve established your expenses, you then need to consider what your acceptable profit margin is going to be. There’s no point in doing business without an acceptable return on investment. Once you compile the expenses, estimate the time you’re likely to spend on a given job. Then, calculate the hourly fee you should charge to cover all the expenditures.

Attempting to do these calculations manually can end up being extremely messy. To get this right from the start, and work to maximum efficiency on all your internal processes, take advantage of advanced lawn care quoting software, such as Jobber. Aside from simplifying the administrative side of your business, it is very effective at letting you create professionally designed quotes that help to elevate your brand’s image and status. 

• Consider offering discounts

Everybody loves a bargain. Research indicates that 17.7 % of business deals are generated by customer acquisition promotions, including discount deals. Investigate whether tapping into discount psychology will help to create more sales for you. (2)

If you do decide to do this, be careful that you don’t offer too many to the detriment of your business. If your initial profit margin was 20%, try not to offer more than a 10% discount. This ensures your business is sustainable in the long run. Discounts can in some cases encourage clients to do more business with you in the future. Once they test your services and start to enjoy the benefits, they may decide to become regular customers. Always measure the success of doing any activity like this to know whether it is something worth doing again.  

• Learn from competitors

There must be several other companies in your locality offering lawn care services. As a rule of thumb, don’t veer too much from their prices. The forces of demand and supply will play out until the price in a particular area reaches an equilibrium. This is referred to as the prevailing market price. (3)

You can price your services below the market price, but only if you expect lower prices to attract enough customers to your lawn care business that you can sustain it. Alternatively, you can set your prices slightly above the competition to make customers think that your services are of higher quality. 

• Play with customers’ psychology

If your calculations imply you should charge USD$100 for a quarter-acre yard, play with the numbers a bit; pricing the service at USD$99.99 will only rob you of a single cent, but this could be the difference between closing the deal and not closing it.

This psychological pricing tactic significantly affects your customers’ bias towards your product. In the previous example, customers would subconsciously interpret the price as “below a hundred dollars” although we’re only talking about a single cent’s worth of difference. You’ll find more customers placing orders than they would, had the price been a flat USD$100. (4)

• Understand your locality

Some cities generally have higher standards of living than others. For instance, cities like Miami, Los Angeles, San Juan, and Santa Rosa are among the most expensive in the U.S. 

If you’re operating in areas like the ones mentioned above, your charges shouldn’t match service rates typically found in less expensive cities like Fort Wayne, Hickory, and Pittsburgh. This strategy is known as geographical pricing.

• Have a loss leader

If you’re pretty new in the market, you might find it challenging in the beginning to land your first customers. An appropriate strategy is to heavily discount one or two services to entice customers to your business. These are known as loss leaders.

Once customers initiate the contact, you can present the other services at regular pricing rates. The profits you make from the regularly priced services should cover the “losses” you made with the discounted services.

Conclusion

Pricing your lawn care services shouldn’t be that nerve-racking. By carefully considering certain factors such as customer psychology and the local market, you should be able to come up with a pricing scheme that is both attractive to customers while still being enough to sustain your lawn care business. 

References

1. “7 Biggest Mistakes in Setting Prices”, Source: https://www.entrepreneur.com/article/196678 
2. “What Science Says About Discounts, Promotions and Free Offers”, Source: https://www.huffpost.com/entry/what-science-says-about-discounts_b_8511224 
3. “Competitive Pricing”, Source: https://www.investopedia.com/terms/c/competitive-pricing.asp 
4. “5 Strategies of ‘Psychological Pricing'”, Source: https://www.entrepreneur.com/article/279464 
5. “Most Expensive Places to Live in the U.S. in 2021-2022”, Source: https://realestate.usnews.com/places/rankings/most-expensive-places-to-live