Pricing structure and how to raise you profits in a recession

Totally agree

You can't charge for example £25 ph when all your competitors are charging £15 you have to be realistic especially in today's economic climate.

Dan Tarleton MSc, BSc (Hons) said:

In my opinion in works well on paper but in reality it doesnt have the dramatic effect that is promised at all. There comes a point when as you raise your hourly rate for your existing customers you lose your customers one by one until you have none. (I speak from experience).Its all well to sit down with a calculator and do it but do it in reality and see that it is not simple at all. I am talking about a business doing it from a standpoint of where they are currently charging the average competitive hourly rate. There are too many competitors out there now days (far far too many) and the more the market is saturated with cheap or average charging landscapers and gardeners the less this strategy (that Neil Thackray preaches) works.

Over saturation of the market is what is killing off the business for all of us. And a lot of customers are driving the prices down and killing the market off. So more and more cheap gardeners are getting the work and taking it away from the established, experienced and rightly so higher priced businesses.

I agree Rob. The thing is, if you present yourself and business and can sell the real 'value' of your service from the offset, i.e. the initial assessment, and follow through on your word with a quality service then I find it's not a problem to sign people up on a reasonable rate.

Presently I work individually but can see the benefits of this system for future expansion. I usually charge by the hour but don't think a client would bat an eyelid if I quote £21 rather than £20 an hour which is the 5% increase of revenue spoke about. As a pie in the sky figure imagine I am working on £8 an hour profit then that £1 increase is a 12.5% increase in profit which over a year or for a bigger operation is quite substantial. Combine that with cost cuts and sales increases & you're winning.

It is a simple theory but I for one hadn't considered the combined effect of these 3 levers until listening to the podcast. Although I may not consider changing my prices just yet it is certainly food for thought for the future.

Replies

Lawncare-4u.co.uk January 6, 2010 at 7:27pm

Very good
i watched a similar one by Robert ?

will try and find it as with video its a little bit easier to concentrate .

good points and all good idea's that we find it hard to initiate being hands on alot of the time !

thanks
Richard Boyd January 7, 2010 at 8:45pm

Great podcast. Worth bookmaking and listening to every 6 months. I thought I was in a niche market but Alex's market must be even more so. All power to Alex for managing to keep SmallBizPod going, top man. I hope that in the years to come the rewards for all his hard work justify his efforts.
Lawncare-4u.co.uk January 7, 2010 at 9:07pm

http://cmypitch.com/advice/show/772/setting_a_great_business_apart_...

Robert Craven
from the Directors centre (search and join his site , not the one ive posted)

Very Good
Good luck _Rob

maybe a good follow up to Phils above - hope it helps.
Lawncare-4u.co.uk January 7, 2010 at 9:14pm

dont put prices down in a recession ' was the video . try a search on google

http://www.thedc.co.uk/

of to pub to get warm -9 here ......
The Perfumed Garden January 8, 2010 at 10:51am

This is very good Phil. It takes your mind off the weather.
J January 11, 2010 at 10:24am

Good stuff, worth subscribing to the whole lot. Loving the funk and blues :) Amazing how a few simple tweaks could have such a positive knock on effect.
- Classic Gardens > J January 11, 2010 at 12:01pm
  
  Totally agree
  
  You can't charge for example £25 ph when all your competitors are charging £15 you have to be realistic especially in today's economic climate.
  
  Dan Tarleton MSc, BSc (Hons) said:
  In my opinion in works well on paper but in reality it doesnt have the dramatic effect that is promised at all. There comes a point when as you raise your hourly rate for your existing customers you lose your customers one by one until you have none. (I speak from experience).Its all well to sit down with a calculator and do it but do it in reality and see that it is not simple at all. I am talking about a business doing it from a standpoint of where they are currently charging the average competitive hourly rate. There are too many competitors out there now days (far far too many) and the more the market is saturated with cheap or average charging landscapers and gardeners the less this strategy (that Neil Thackray preaches) works.
  
  Over saturation of the market is what is killing off the business for all of us. And a lot of customers are driving the prices down and killing the market off. So more and more cheap gardeners are getting the work and taking it away from the established, experienced and rightly so higher priced businesses.
J January 11, 2010 at 1:00pm

I agree Rob. The thing is, if you present yourself and business and can sell the real 'value' of your service from the offset, i.e. the initial assessment, and follow through on your word with a quality service then I find it's not a problem to sign people up on a reasonable rate.

Presently I work individually but can see the benefits of this system for future expansion. I usually charge by the hour but don't think a client would bat an eyelid if I quote £21 rather than £20 an hour which is the 5% increase of revenue spoke about. As a pie in the sky figure imagine I am working on £8 an hour profit then that £1 increase is a 12.5% increase in profit which over a year or for a bigger operation is quite substantial. Combine that with cost cuts and sales increases & you're winning.

It is a simple theory but I for one hadn't considered the combined effect of these 3 levers until listening to the podcast. Although I may not consider changing my prices just yet it is certainly food for thought for the future.
1st Garden Maintenance June 17, 2013 at 8:52am

We don't quote by the hour but a fixed £ per job, so no matter how long the job takes it is going to cost the same to the customer. The point is that you can do a job much faster than the customer (if you have the right tools and skills), so the customer may think it will take you two hours, and in fact you do it in 30 minutes. so if you have given a fixed price, you are the winner. If you have quoted £ per hour, you are a looser.
The cheapest job we do is 100 square metres lawn mowing for £25. We let the cowboys do all the cheaper jobs, and we just stick to making a profit.