The following is a one-page, randomly chosen excerpt from one of our “How-to” business plans, this one for an eco-friendly residential landscape maintenance company.Pricing Strategy
- Pricing strategy for this industry is such that bids for service have to be cost competitive. Customers may be willing to pay a little more for eco-friendly service, but if the bid is noncompetitive, the job may be lost, no matter the sustainability advantages. With smaller lawns and more compact neighborhoods, your agile equipment and ease of setup should allow for highly competitive pricing in these jobs.
In general, large lawns (> 1/3 acre) may be bid at $35-50 per week, medium sized lawns (roughly ¼ to 1/3 acre) may be bid at $25-35 per week, and smaller lawns (less than ¼ acre) may be bid at $20-30 per week, depending on complexity of job (See “Industry Lingo”, below for how to visually size up the acreage of a lawn).
- You may choose to match any competitive bid by another professional lawn care service in situations where lawns are small and neighborhoods compact. You will likely find that small jobs are easy enough, and once you get the hang of it, they should take no more than 5-10 minutes.
- With bigger lawns, more spread out housing, and higher end customers, simply price out the bid by taking stock of the landscape in need of maintenance and providing a bid for the time and other resources that should be needed to conduct the job. Alternatively, you can offer to do the job for the client one time for no more than a certain amount (feel free to ask them what competitive bids they’ve had, or what they paid the previous year). After that one time, you will know how big a job it is and whether you can continue at the rate set out or if you need to ask for more. Don’t be afraid to bid high for jobs that are fairly big: 1) this job will prevent you from doing several smaller jobs in the same time, so there is a significant opportunity cost, 2) a low bid may make you appear desperate for business, and 3) the customer may be unhappy with their current or previous service and give you the big job.
- In future years, return clients will be given an incentive to sign contracts early, so that the company may lock in guaranteed revenues and focus its marketing efforts at finding new clients. These incentives may be set bonuses (e.g., $50 credit toward the year’s maintenance), percent discounts (e.g., 10% off service cost), set time period rebates……..