We just returned from 3 weeks of travel. This included 2 weeks of private consulting meetings and one THINK WEEK. I’d thought you would like to learn about the trends I have confirmed.
FIRST…did you hear the news revealed on the Employment Situation Report from Friday?
Unemployment remains at a 50-year low of 3.5%. Even though I’m one of the weird ones who loves to read the boring government reports, my work with privately owned companies had already revealed the trend.
Trend #1 – Wage rates continue to climb!
It’s an old-fashioned law of economics. The professors call it the law of “supply and demand“.
When supply is low, prices go higher. When demand is low, prices go lower. So, when you see the report that the unemployment rate is at a 50-year low (most people who want a job already have one), you can bet your britches that wage rates will continue to go up.
It doesn’t seem to matter where I go to meet my clients…east coast to west coast…from up north to way down south… the law of supply and demand continues to be as reliable as the law of gravity on Earth… when you are considering the near-term TREND on wage rates.
Here’s our recommendation:
In order for you to hold on to your best help, we strongly recommend wage increases to help protect your employees’ purchasing power.
We believe 2023 will be a year that companies with weak balance sheets and a fear of raising prices could be wiped out. We have our eye on the financial reports of some big ones we expect to fail in the near term. When it happens…BOOM…the landscape industry will change. But it appears this Spring season will be as competitive as they get…when it comes to labor.
We would have never guessed that Fedzilla would have stepped in with helicopter money dropping from the heavens like they did in 2020, 2021 and 2022…but the older we get the more we believe the impossible will soon be made probable. Like a few weeks ago when Fedzilla it would insure 100% of bank deposits. I called BS on day one.
Trend #2 – Inflation rates are much higher than recent decades…
Back in January, good ol’ Fedzilla handed out the 8.7% pay increase to folks receiving Social Security benefits. Did you follow suit and use the 2022 inflation rate to increase your lawn and landscape prices? I sure hope you have followed our recommendation on pricing work for 2023. In case you missed the 2023 Lawn and Landscape Pricing Guide Webinar, just click here to watch and listen to our recommendations.
Keep this in mind. Between 2000 and 2022 fuel prices increased 100%.
According to our friends at the US Department of Agriculture, food prices increased:
3.9% in 2020
6.3% in 2021 and
10.4% in 2022…
for a grand total of 20.6% inflation for our FOOD in 36 months!
I’m sure you can read between the lines…but this just in case you don’t see what I see, let me spell it out for you.
Your people need higher pay to be able to feed their family.
You need higher prices in order to pay the higher wages.
Raise your prices or suffer!
Trend #3 – You will start to see more customer turnover.
Not all households are the same. Higher prices may force some customers to threaten to cut out lawn services and simply become a landscape-do-it-yourselfer.
But please…remember this my friend. There is no glory in doing work below your cost. You don’t need more experience; you need more income.
So, take this next recommendation as seriously as possible.
You MUST accelerate your marketing and sales efforts in 2023. This will ensure you can replace the marginal accounts with correctly priced accounts.
We had an interesting conversation with a long-term client. He shared a conversation from one of his lawn service clients who had received a price increase of 20% for 2023. I’ll try to be short.
This client happened to be the President of a bank. He told my client that he would only accept a 6% price increase. He added that he can’t pass along price increases to consumers in his bank…so he (Mr. Landscaper) shouldn’t be trying to raise his prices 20% on his lawn service.
I think the bank president is confused.
Perhaps he needs the opportunity to hire people to work in the summer heat using equipment that has increased in cost 25% in the past 3 years and try to get that equipment serviced when it breaks down. Mr. Banker has forgotten why he hired my client so many years ago. He needs to get out on Saturday morning and do his own lawn care for a while.
Which reminds me of what happened with one of my dear clients, Dr. Surgeon…yes…as in heart surgery…who would not agree to a price increase we presented after servicing his property for a year. He did not like the price increase. He said, “This is robbery, I’ll do it myself”. It was his decision. The only regret I have is that we gave him the price increase notice in the fall of the year.
Dr. Surgeon decided, “Well the grass won’t be growing for the next few months. I’ll save some money.”
Unfortunately, the good Dr. fell from the ladder one weekend as he was trying to save some money and winter prune the 12 foot tall crape myrtle trees. He broke his arm (requiring surgery) and he was out of work for several months.
It’s sad for the Dr.
But you better believe we used that story every single time a high earner or wealthy client tried to fuss or complain about a price increase.
Yes…we have recommended to our client that you remind Mr. Banker you are “deeply sorry” for not giving him the price increase he should have gotten the past three years. Because, if my client, Mr. Landscaper would have been raising prices each year, a one-time 20% increase may have been avoided.
Let’s wrap up this Wealthy Landscaper Lesson with one final recommendation:
Reignite your marketing efforts to help you replace marginal accounts. Account turnover is coming.
He is risen…
PS – Have you felt a little push-back on price increases this Spring season? Have you been challenged about price increases by some of your clients? Are your employees asking for higher wages? Has your grocery bill hit the highest level in your career? Send an email and share your story. We’d like to hear from you. Tony@TonyBassConsulting.com
And when you are ready, we have a few ways to help lawn and landscape business owners.
Want to get some help improving your pricing system? Schedule a 20 minute strategy session with our Director of Training and Education, Tabitha Lovell. Tabitha has been on our team for over a decade and helps lawn and landscape business owners learn our systems. Click here. No fee.
Want to work one on one with Tony Bass? It’s not free. You can buy an hour of Tony’s time at a huge 50% discount by clicking here. You will get instant access to Tony’s calendar to schedule a phone meeting.
If you need trucks for your lawn or landscape business, contact Maxx Bass, Truck Sales at Super Lawn Trucks. 866-923-0027 or email Maxx@superlawntrucks.com . And you can review in-stock and ready for fast delivery trucks by clicking here.