Landscaping Accountant

Are you Boxing Yourself in from Potential Profits?

A financially healthy green industry business is highly dependent on their estimating and pricing strategy. As we recently discussed in our 2023 Green Industry Budgeting & Financial Planning webinar, a budget is only as good as the accuracy of the financial data inputted into it. This budget then gives you the view into what your contracts and projects will need to be priced at to hit your desired profit. It sounds straightforward, but in reality there are unforeseen factors and unexpected events in business that make this more of a challenge. To cover these unforeseeable factors going into 2023 be sure to build in a contingency factor into your pricing. The goal is to make a margin based on all of the costs incurred during a job, even if your operation is not as efficient as it needs to be.  

As an accounting firm, we always like to tie decisions back to the numbers and how the business will be affected financially. This mindset is necessary, but it’s also important to keep other factors in mind as well. You may be able to calculate the exact price of a project based on your financial data, but how does it differ from your competitors pricing? If you are constantly coming in lower than market pricing, then it may be beneficial to increase pricing, especially in an environment of labor shortages where doing “more with less” is key!

We would also challenge you to go a step further. You now have clear financial data, know your breakeven point, minimum pricing to make a profit, and are aware of market pricing. This is great, but you may still be boxing yourself in from potential profits! Value pricing is a term being thrown around lately, and it means that the perception of a price is not necessarily determined by actual market price or financial worth, instead its in the way the pricing is presented to us. People are willing to pay based on the perceived value of the service, and you should be charging based on what people will pay!

You should consider revisiting your pricing strategy based on the value you provide, especially if you find yourself performing a high work volume paired with low profits. Start with one project or contract and remember that it starts in the marketing and sales process. Doing phenomenal work in the field is great, but a professional and strategic marketing and sales approach is a great start to setting the tone for a value-based pricing strategy. On an ongoing basis keep customer service and service delivery a priority, and you will face less push-back from customers during price increase conversations. Don’t limit yourself, prioritize profits, and then you will gain momentum!

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