If you read our recent New Year, New Budget blog about putting together a sustainable plan for 2022, you know it’s inevitable that landscape contractors must increase their prices if they want their businesses to survive. Talking about money can be uncomfortable, especially when it means telling someone they’re going to pay more.
It’s important to notify your clients about your new pricing structure as soon as possible to avoid surprises at invoice time. Most people have probably read or seen news reports about inflation, and they’ve experienced higher prices at places like the gas station and the grocery store, so it shouldn’t come as a shock. Here are seven tips for sharing the news:
1. Nail down the details.
Before you can let clients know what’s happening, you need to know what’s happening. First, determine your new pricing — let’s say a 10% increase for 2022 — then decide how and when you’re going to implement it. Will it be a one-time-only increase or will it be implemented in phases?
Each method has its pros and cons. A larger, one-time number may initially shock some clients, but many business experts recommend it because it gives people the ability to plan their expenditures, and it doesn’t remind them about rising prices every few months. Jill Odom of the National Association of Landscape Professionals and Greg Herring of The Herring Group discuss the issue in their blog, Business Smarts: The Art of Raising Your Rates.
2. Craft a clear message.
When you draft your letter to clients stating that prices are going up, include the reason for the increase, the date it will go into effect and that it’s necessary for you to continue providing quality service. Conclude by thanking clients for their business and for their understanding, and include your contact information.
Here’s an example: “Due to the rising cost of materials, supplies, fuel and wages, Company XYZ is raising our prices 10%, effective March 1, 2022. This will ensure that we can continue to provide our valued customers with the highest-quality service, and invest in the best materials, equipment and training available. We appreciate your business and your understanding. If you have questions or concerns, please call 000-000-0000 or email firstname.lastname@example.org.” Before printing or emailing your letter, have someone proofread it to ensure that the message is clear, and everything is spelled correctly.
For information on setting up a business letter, visit the Purdue Online Writing Lab’s sample business letters page. TemplateLab also offers 50 free, downloadable price increase letter templates that you can tailor to fit your communication needs.
3. Get the message out.
Do you communicate with clients through email, regular mail, phone calls or face-to-face conversations while you’re working at their homes or businesses? Does your onsite manager or crew leader handle face-to-face communications with clients? Stick with your usual method of communication for consistency. When communicating face-to-face, give your client a printed copy of the letter. When talking to clients on the phone, ask if you can email a copy or give it to them the next time you’re onsite.
4. Don’t procrastinate.
As soon as you’ve made the decision to change your rates, begin letting clients know, especially those whose contracts are coming up for renewal soon. Give at least 30 days’ notice of the change, longer if possible. That will help your clients plan, and it will give you time to answer questions and offer other options before the increase goes into effect.
5. Start small to test the waters.
If you’re worried about how clients will react to the increase, reach out first to a small group either face-to-face or by telephone so you can hear their responses firsthand. That should give you an idea of the kind of questions you may receive and how to answer them.
6. Be prepared for pushback.
While business experts predict that most of your clients will accept that you need to increase prices to stay in business, some may object, so be prepared. Don’t apologize, don’t feel guilty and don’t cancel their increase. Instead, thank the client for their response, thank them for their business, and reaffirm your commitment to providing quality work. If your client is open to a lower-level service package or an add-on that doesn’t cost you extra but increases the value of the service you provide, offer it. For some ideas, check out our blog, How to Create a Recurring Revenue Model that Appeals to Your Customers.
7. Know when to say goodbye.
No matter how prepared you are for pushback or what you offer to keep a client’s business, there will be some who won’t stay after a price increase. That might not be a bad thing. Analyze their account. Is the job profitable or does the client send a lot of business your way? If the answer to those questions is “no,” you have your answer, and it may be time to let them go if they aren’t willing to accept a price increase.