Landscaper Pro Tip: How to Set Pricing

Hey landscaping pros! Let's talk about the big question our bookkeeping pros are always asked: "How should I set pricing for my landscaping business? How do I know what to charge customers?". We all know setting the right prices can make or break your business, and with costs going up everywhere, it's more important than ever to get this figured out before the spring rush hits.

Step 1: Know your actual operating costs.

I'm talking about everything: gas for your trucks and equipment (and we all know that ain't cheap these days), wear and tear on your equipment, maintenance costs, and those unexpected repairs that always seem to pop up. Don't forget about your insurance costs and any licenses or permits you need. Write it all down and add it up. You might be shocked at how much you're actually spending to run your business.

Step 2: Know your labor costs.

Labor costs are a whole other ball game you need to tackle. With minimum wage going up in many places and good workers getting harder to find, you've got to factor in competitive wages. Think about overtime during peak season too - those extra hours add up fast. And don't forget about payroll taxes and any benefits you're offering. A good rule of thumb is to assume your true labor cost is about 1.5 times what you're paying in hourly wages.

Step 3: Account for non-billable time.

Now, here's something a lot of landscapers overlook - your overhead time. All those hours you spend giving estimates, driving between jobs, maintaining equipment, and doing paperwork? That's real work time that needs to be factored into your pricing. Same goes for rain days and other weather delays - you've still got bills to pay even when you can't work. A solid pricing strategy needs to account for all this non-billable time.

Step 4: Figure out your all-up, true hourly cost.

When it comes to setting your actual prices, don't fall into the trap of just copying what other companies charge. Sure, you need to know what the competition is doing, but your prices need to work for YOUR business. A good starting point is to figure out your hourly operating (step 1), labor (step 2), and non-billable hours (step 3), then add at least 30-40% for profit. Remember, profit isn't just extra cash in your pocket - it's what allows you to grow your business, replace equipment, and handle slow periods.

How to tell customers your prices are going up

Let's say you do all of the math and figure out that you need to raise your prices. Let's talk about breaking the news to your customers about price increases. The key here is to be upfront and give plenty of notice. Send out an email or letter to your regular customers now, explaining that due to increased costs in fuel, materials, and labor, you need to adjust your rates. Keep it straight and honest - most people understand that costs are going up everywhere. You might say something like: "Hello [Insert Customer Name], we've been proud to serve you for [X] years, and to keep providing the quality service you expect, we need to adjust our rates starting [date]. Here are our new prices..." If you've been doing good work, most customers will stick with you.

Remember, at the end of the day, your pricing needs to keep your business healthy. You can't provide great service if you're not making enough to cover your costs and pay yourself fairly. Take the time now to crunch these numbers and get your pricing right - your future self will thank you when you're actually making money during the busy season instead of just staying busy.

If you need help with marketing, advertising, or bookkeeping for your landscaping business, Trades CXO is here to help. We specialize in the skilled trades and will build you a customized plan that not only grows your business, but adapts with your business as it grows. Reach out for a free consultation today!