For Lawn and Landscape Business Owners
Urgent message: Wealthy landscapers have the courage to raise prices.
The data has NEVER been more clear from the Bureau of Labor Statistics (BLS).
This week, the Consumer Pain Index (CPI) – this is the backwards looking price data from the BLS – says the inflation rate is 8.6%, the highest in the USA since 1981.
Here’s one part of the inflation. You may have noticed this (sarcasm intended). Gas prices are the highest in our nation’s history. The team over at the Energy Information Administration (EIA) are carefully tracking the data for us.
Data from May of 2022 USA gas is $4.44/gallon. May of 2021 we were paying an average of $2.99/gallon. That’s a cool 48% increase in 12 months.
It might be hard for you to remember all the way back to May of 2020 when the USA gas price was an average of $1.87/gallon. We have seen gas prices increase 137% in TWO YEARS!
Now let’s think about this. How does dictionary.com define hyper-inflation?
Do the facts about gas price increases meet the definition of hyperinflation? I’ll bet you won’t hear the word used on the major news networks this week, but you’re hearing right here in the pages of the Wealthy Landscaper Letter. Yep…137% seems extreme and excessive to me.
This report was followed up by the Producer Pain Index (PPI) – let’s call this the forward looking price data from the BLS – which shows inflation up 10.8%. This marks the sixth consecutive month the PPI reports show double digit inflation.
So what’s a hard-working landscaper going to do with this data?
Well…I HOPE you have raised your prices in 2022. And…I hope you will have the courage to raise them further. Because…our cost of business IS going up much faster and much larger than our leaders in government will admit.
It’s crystal clear that inflation is way higher than 8.6% or 10.8% (if you buy gasoline OR food on a regular basis).
Which brings us to the most important message you’ll receive today.
Raise your prices!
Failure to raise prices for lawn and landscaping services puts you, your family and your entire company at risk.
Unfortunately, we continue to talk with lawn and landscape business owners who have been slow to raise their prices. We believe lawn business failures are right around the corner.
I jotted some notes from one of my Friday afternoon coaching sessions with a landscaper over in Texas where the temperature was 103 degrees F on Friday afternoon at 2 pm central.
My goal in the conversation below was to help him understand his costs a little better than he did before the call started.
Lawn Service Pricing Example Below…
Here’s a brief summary from our phone call today Jimmy.
1) Your costs are going up up up…
2) You have raised prices in landscaping services (good thing) but only on TWO lawn maint accounts this year…danger – danger – danger.
3) Failure to raise prices on maintenance accounts has the potential to destroy you and your entire company.
4) To help you understand the seriousness of the pricing problem, consider these facts about current prices..
Team pay rates
Crew Lead – $25/hr
Lawn tech 2 – $23/hr
Lawn tech 3- $18/hr
Avg wage = $22/hr
OT factor = 15%
Today’s average wage $25.30
add labor burden @ 22%
Add Truck @ $14/hr
Add 60” ZTR mower @ $15/hr
Add 2 cycle equipment @ $6/hr
$65.87 per hour – YOUR COSTS TODAY FOR A ONE MAN MAINT CREW!!!
(no overhead recovery built in here – no Profit either)
If you are doing ANY job that is paying less than $75/hr – YOU ARE PAYING THEM!
RAISE THE PRICES OR SUFFER BADLY.
Consider a two man crew costs.
$65.87 per hour plus $30.87/hr costs for the second man.
You are now at $96.74/hr costs for the two man crew.
Consider a three man crew costs.
$96.74 per hour plus $30.87/hr costs for the 3rd man.
You are now at $127.61/hr costs for the three man crew.
NONE OF THE PRICES ABOVE RECOVER OVERHEAD.
NONE OF THE PRICES ABOVE PROVIDE PROFIT.
We are not trying to get overly complicated here.
But put the illustration above into perspective.
Let’s say you are working a 3 man crew that is COSTING $127.61/hour and they work a 10-hour shift. This means your costs for the day will be $1,276.10.
Please sit down and analyze your route for a day. Are you covering your costs? Did the sum of the work you completed and billed for the day exceed $1,276.10?
If it does not, you are in serious trouble.
Last time today…
RAISE YOUR PRICES OR SUFFER GREATLY!
We’d like to ask you.
Have you raised your prices in 2022?
If you’ve been reluctant to raise prices, you are not alone.
But if you don’t raise prices so you can pay yourself more and pay your employees more, you’re going to be all alone…working on a truck with no help and a truck load of worn-out equipment.
Let me know how you are doing with the idea of raising prices this season.
Tony Bass, founder
PS – Wealthy landscapers always follow the formula. Price Right – Keep Promises – Create Clients.
We will be holding the highly rated Profit Builder Training Event in August. This small group weekend retreat guides you through the process of building a budget, establishing your pricing system and improves your estimating skills. We intentionally keep the classes small so each company gets plenty of personalized instruction. Reserve your seat by going here.
Since 2010, over 400 lawn and landscape business owners have graduated from this class. Many of our first-time attendees double their company profits within 12 to 24 months of attending the class.
If you like the idea of improving your pay and building a profitable lawn and landscape business, join us.