With inflation kicking in, landscapers may need to raise prices. You might hesitate, for fear of losing customers and revenue. But, if you deliver a subpar final project, will that not also lead to lost customers, not to mention compromise your company’s reputation? As the price of gas and materials continue to rise, your prices also need to increase for you to meet your bottom line.
“The Talk”: Uncomfortable, But Necessary
Explaining why you are increasing prices can be an uncomfortable, but necessary discussion to have. Depending on your unique business, this discussion may need to occur between you and your customer or you and the project manager.
When a project manager is setting budgets for each individual aspect of the overall project, the landscaping budget may be one of the first areas to get trimmed. Be at the ready to defend the value of quality landscaping.
Increased Cost of Materials
The pandemic has caused a surge in demand for home renovation projects, housing upgrades, and landscape improvements because people are continuing to stay at home more often. The idea of a “staycation” has become more and more appealing when traveling continues to come with added risks and extra hassles.
Due to the pandemic and supply chain issues the price of raw materials shot through the roof. While some materials may be harder to come by and therefore more expensive due to the increased demand, other materials that are still in good supply have also become more expensive.
Look at the price of gas for instance. The price that it costs to even transport the materials from point A to point B to be installed or applied has increased significantly. Then consider the price of lumber, steel, PVC, chemicals, fertilizer, and even the inflation of currency. There are a lot of things to consider when quoting a project price and when trying to explain the value of your quote.
Another consideration is that inflation is causing labor costs to rise as well. The average pay raise for the last year was between 1.5-2%, but inflation has been over 7%. In such a tight labor market, employers typically need to pay higher wages to attract employees, continuing to add to your overall budget.
Do Your Homework
When comprehensively considering all project costs (cradle to grave) you need to look at each of the suppliers you will be using to supply your materials, whether that is sod, soil, chemicals, gravel or plants. All these materials will need to be transported to the site, and as discussed earlier, fuel and inflation prices continue to increase making the overall project more expensive.
Landscape maintenance products are expected to be drastically affected by the pandemic in 2022 and beyond. On average, recent estimates from suppliers reflect a possible 20-30% increase in fertilizer, seed, lawn mowers, tools, and pest control products. (Source: University of Nebraska-Lincoln)
Since prices in general have and continue to increase, if you want to get a quality product, chances are the prices of that product have also increased. Why? Because the businesses who have not increased their prices are having to cut corners to keep their prices low.
Don't Compromise Quality
You do not want to get your materials from a company that is cutting corners and supplying a lower quality product. Continue to purchase quality materials to use for your projects so you yourself are delivering a quality product and your customers will be happy with your work.
Bottomline: In order to stand by your work and deliver a product or service you are proud of, your prices will need to increase because your raw cost to complete a project are increasing.
While you and your team are still going to do the same work you did before the pandemic, we are currently living in an environment where a lot of raw costs have increased significantly.
Stand Your Ground
Explaining pricing increases to a project manager or a customer is never easy, but once you do most will respect your integrity and decision to increase prices to deliver a quality project. It is not that you are making more money, but you want to deliver a service you can stand by. Don’t compromise quality and deliver the final product or service the customer deserves.