In 2022, rapid inflation has made many businesses have to come to terms with the idea that their rates will have to increase. The question that many business owners have to grapple with is how much to increase their rates. Increase them too much, and you will drive away customers, increase them too little, and you will not be able to keep your doors open.
If you have a landscaping business and are not sure how much your rates need to increase in 2022, you are not alone. Thankfully, this guide can help you to increase your rates correctly for the current market. There is a fine line that must be walked to offer services to customers at rates that they can afford while thinking about your bottom line.
If you are ready to learn some more about how much landscaping rates should increase in 2022, you need to keep reading.
There are some common factors that all businesses need to be aware of when they are determining the right rate increase for 2022. One of the major factors that impact inflation is the cost of fuel. As gas prices continue to stay static at $5.00 and higher, the cost of all kinds of services and the transportation needed to provide them must go up. It might cost you twice as much to provide services to clients as it did in 2021, all due to gas price hikes that have shown no sign of leveling off.
The other thing that businesses need to be aware of is that the cost of labor is going up. Landscapers today need to charge about $50 to $100 an hour for a crew of two just to cover the wages of the employees who offer the services. These costs must necessarily be handed down to customers at some level, or a landscaping company cannot hope to stay in business.
There are various other local or regional factors that might also impact the cost of doing business in your area or region. All of these factors have to be considered when you are looking at the right cost increase for your business.
If you are not sure how much you need to adjust your rates to take into consideration the rate of inflation, you need to work with some hard facts. The Bureau of Labor Statistics (BLS) released a report in November of 2021 that showed that the average inflation increase that is being felt in all industries across the US is about 10.2%. This number was arrived at by looking at the CPI, which was up 6.8% from the year before, and the average monthly price increases being assessed to consumers nationally.
This figure means that you will need to increase your rates by as much as 10.25 in order to keep up with inflation alone. This might not be enough of a price hike to pay the company back for the other costs that are escalating due to inflation as well, but it is a good number to provide the base for your price increase.
For many businesses, there is a delicate balance between these necessary cost adjustments and trying to preserve competitive rates that will not make consumers look elsewhere for service providers. There are some strategies that you can use to help you to make the right decision with regard to your rate increase, and that can help you to find the right middle ground for the needs of your business and your customers.
Make sure that you look at statistics with regard to inflation and price increases across various industries in your area. You might want to look at cost changes in your region, your state, and also your county to get a really accurate picture of the changes that are being felt by businesses and consumers in your area of operations. The better your understanding of the cost of living changes and other inflation factors, the easier it will be to determine the proper rate increase for your business.
You should also do a survey of the rates that other companies in your market are asking for their various different services. You will need to remain competitive with these businesses when you increase your rates or you might not be able to retain your clients or draw in new customers. You do not need to beat all the prices that the other companies are offering, but you do need to be within a few dollars of their average numbers to be considered competitive.
Consider sending out surveys to customers asking them to rank your service offerings in order of importance. You can also ask what kinds of services they would be willing to pay more for. This information can help you to remove landscaping services from your services menu that are not in demand and to balance prices across your various service offerings to help with your bottom line. Customers can be the best source of information when it comes to rate increase tolerances, and you should not skip talking to them about their preferences before you make any changes.
If you have been struggling to figure out what your company’s rate increases need to be, you will just need to do some research. Knowing what the national rate of inflation is and understanding the tolerances of your local marketplace is important when it comes to rate adjustments. The more data that you have to work with, the more likely you will be to make an educated decision that will allow you to keep customers and remain relevant in your market.
Avoiding rate increases will only cause financial strain for your business in the future, but you should make the right rate increase for your company to prevent problems with lost business. The delicate balance of finding the right rate increase can be easy to manage if you take the time to look at the facts and figures before you make a decision.
Interested in making your business more profitable? Try VIIZR, the hardworking job management tool for trades and service businesses, from Ford Pro and Salesforce. To get started at no cost, click here.