One of the biggest issues many LCO’s face is trying to figure out how to charge for their services.  Some experts suggest a percentage over cost.  Other recommend an hourly fee plus some charges for overhead.  Well, I’ll leave the actual how-to pricing strategies to the experts but one thing I will say is the ONLY thing that really matters is the VALUE.

That’s right, it doesn’t matter what the price is as long as the perceived value, in the minds of your customers, is equal to or greater than the price they’re paying for your services.  So even if a job only costs you $5 in hard costs (labor, supplies, time, etc.) but to your customers is worth $100, then by all means charge $95-100.

So stop looking at your services as a cost-price equation and start looking at it as a price-value equation.  Find out what your customers expect in terms of value and start pricing your services accordingly.

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Here’s a fantastic article from one of the few daily e-newsletters I read, Early To Rise. This one’s by Bob Bly, a very well known copywriter and business consultant. Even though this article refers to a real estate brokerage, the principles DEFINITELY apply to a lawn care or landscaping business.

Ding, Dong, Foxtons’ Dead

By Bob Bly

After eight years, Foxtons, the NJ-based discount real estate company, is planning to shut its doors forever, and is filing for bankruptcy. I couldn’t be happier.

Glenn Cohen made a splash when he founded Foxtons in 1999, promising to save home buyers and sellers money. How? By cutting the company’s commission for its agents from the traditional 5 or 6 percent to just 2 percent. And its collapse is a much-needed reminder that discounting - competing based on price - is a lousy long-term business strategy.

The average real estate agent working at a brokerage that charges a traditional commission has a modest income - around $47,000 a year. So what kind of professional do you think you can hire by paying him just one-third of the commission his colleagues are getting?

Discounting stinks as a business strategy, because the more you lower your price, the less money you make. Eventually, you end up working for peanuts - a terrible way to live - for customers that don’t value your service, experience, or knowledge.

Also, if low price is your only selling point, what happens when the guy across the street undercuts you in a price war?

Low-priced vendors and their employees resent working for so little, which translates into crappy service for the customer.

Nobody wins.

So instead of being the low-priced bidder, think about how you can add value to your service - and, by doing so, command premium rates. You’ll make more money and attract a better class of clientele that will respect you more and be happier with what you’re doing for them.

Everyone wins.

Ironically, Glenn Cohen was honored in 2002 as one of 10 New Jersey Entrepreneurs of the Year - apparently by a committee that doesn’t know squat about business in the real world.

(Source: The Record)

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