Run the Numbers: What Should You Charge in 2027? Ep. #540

0:00Let me ask you a question. How much are you raising prices next year? Five percent, seven percent, ten percent? Why? Seriously, why that number? Because your fertilizer went up, is it your insurance went up? Because you heard somebody on Facebook say the raising prices by ten percent. Is it because another contractor told you that what they're charging per man hour? Well, let me tell you something that's not pricing that's guessing. And here's the problem. Four or five months from now, you're going to forget some of the most valuable information your business is trying to give you right now. You know, you're going to forget that property that consistently took 20 minutes longer than it should have. You're going to forget the customer who called six times about a $70 service. You're going to forget that route where you spent half the day staring through a windshield instead of producing revenue. You're going to forget a piece of equipment that kept breaking down. And you're going to forget the service that you thought was making money until you actually had to perform it. And you're probably going to forget some of the really good stuff too.

1:02You know, you're going to forget the routes that actually clicked, the services that were easy to produce, the customers who were an absolute pleasure to work for. And the days when your trucks went out, everything ran smoothly. Everybody got home on time and the company actually made some money. Right now that information is fresh. And that's why your 2027 pricing process shouldn't start in January. It should start right now. Today's episode is brought to you by Yard Book. The all-in-one CRM for your lawn care business. And as an exclusive partner of this podcast, you can get started today and begin simplifying your business and maximizing your profits. Sign up now at YardBook.com. The link is in the show notes. Time now for Profits with Page Act. Any central podcast for you in the green industry who are looking to unlock the whole potential of your business. Posted by John Page Act, your sort of live financial coach. The show features in-depth discussions with successful entrepreneurs, thought leaders,

2:04and industry experts providing practical advice and proven strategies on financial planning, operations, marketing, and sales. Profits with Page Act has valuable insights and action steps that you can implement today for creating long-term success. Now, here's John Page Act. Welcome to Profits with Page Act. The podcast for you dive into business strategies and financial insights for the green industry. And today, I want to talk about something that every business owner eventually has to deal with, and that's pricing. And the thing is, this is not going to be another episode where I tell you that you need to raise your prices. I don't know if you need to raise your prices. You might not. What I want to talk about is figuring out what those prices actually need to be, because there's a big difference between raising your prices and correcting your prices.

3:06And the only way we're going to know the difference is if we run the numbers. So every year, as we get toward the end of the season, the same conversation starts popping up. How much you guys raise in prices next year? And then the answer start rolling in. Well, I'm doing 5% or I'm doing 8 or I'm doing 10 across the board. Or I'm not raising anything because my customers won't pay it. Okay. But where did those numbers come from? That's what I want you to think about. Because if you're starting with a percentage, you're starting at the wrong end of the equation. The question isn't, how much should I raise my prices? The question is, what does my business need to charge in order to accomplish what I needed to accomplish? Or say that again, what does my business need to charge in order to accomplish what it needs to accomplish? Now those are two completely different questions. You know, suppose you charge $60 for a service today and maybe $63 next year is perfectly

4:12adequate. But maybe you need $72 or maybe you need $85 or maybe $60 is already a perfectly profitable price and your actual problem is that it takes your technicians 45 minutes to perform something that should take 25. And a price increase doesn't necessarily fix an operational problem. And that's why we have to understand what is actually happening inside the business. Now take any of your services that you offer and ask yourself this question, what did it actually cost you? Now this is where we're actually going to run some numbers. Now what you think things cost, what did they actually cost? You know, what did you spend on labor? And I'm not just talking about the hourly wage. I'm talking payroll taxes, workers compensation, overtime benefits, paid time off, whatever applies to your business. Now I ask, what did you spend on materials?

5:13You know, for my business, it's like fertilizer, herbicides, seed. You know, if you have a landscaping company, you might include mulch and plants and irrigation parts. You know, we start getting into like the equipment you're talking about fuel and repairs and maintenance and replacement and payments and insurance, the trucks, the trailers, the software, the phones, the advertising, the accounting, all this stuff, right? The storage, the shop rent, the utilities, credit card processing. And here's the one that most people conveniently leave out. You, what did the owner get paid? Because if the business only works when the owner works for free, the business doesn't work. And then after everybody gets paid and all the bills are covered, what's left? Well, profit. Not whatever half to be sitting in the checking account, I'm talking actual profit. These numbers are what should eventually drive your pricing decisions. Not Facebook and not your competitors, not some guy on a YouTube channel, not your

6:15competitor or not even me. Because none of us have your numbers. Now I want you to understand something else because this is another mistake I see. When we look at customers based on revenue, you know, we say, oh, this is a $2,000 customer or this is a $5,000 account or this property generates $10,000 a year. That's great. But how much does it cost you to generate it? You know, let's take two hypothetical long applications, right? Customer A pays you $100. And to write in the middle of your row, your technician pulls up, they treat the property, they leave the invoice or they close the job electronically and they head three houses down to the next customer. Customer B also pays you $100. Except they're 15 minutes away from the previous stop and there's a lock gate and the technician has to call the customer and nobody answers and they wait and eventually somebody calls

7:18back and the technician gets in and performs the application. And then two days later, the customer calls the office with a question. Then three weeks later, you have to send somebody back out there and the thing is both customers gave you $100. But those are not the same $100. $100 of revenue tells me almost nothing until I understand what it took to produce that revenue. And that's what I want you to... This is why I want you looking at your customer list right now. You know, we are in the beginning of September of 2026. Let's start planning ahead for 27 here. You know, which properties consistently took too long. You know, you clock in and you see that maybe the same revenue of $100, you know, took a technician, say, 10 minutes to provide that to accumulate that. But then the second one, the same $100, but it takes 30 minutes.

8:19Why? All right. Look at which customers require excessive administrative time. You know, if they're constantly calling you back over a, say, $70 or $100 service and it's like you have to make three or four house calls because of it. Why? Don't you think that costs you money? Does that just come out for free? You know, we have to look at where you're out outliers. Like who are the ones that are kind of on the fringes? Are they taking a lot more windshield time from your route? You know, what are the access problems that are the gates that you have to get through? Is there someone that has to make sure that their dogs get pulled in before you do an application or come in Mo the lawn? You have to have like a special ramp to get up like stairs or something that go into the backyard. I mean, these are things that you can't generally see all the time. You know, you got to see where you're constantly making callbacks where your estimates, you

9:23know, are getting our wrong all the time. Maybe the Google map feature isn't, it doesn't have enough information or it doesn't show elevation changes or it doesn't show where, you know, these, they're older photos and there's no fence, but there is a fence there when you show up. You know, you got to understand like, okay, well, where are we, where are those estimates consistently wrong? What do we have to change something? Maybe this one we can't do online, we can't send estimates online, we kind of have to actually go and visit the site before we give it an accurate estimate. And then here's another question, you know, which customers are great? You know, don't just hunt for problems, identify what works because maybe your ideal customer isn't the biggest property. Maybe it's an 8,000 square foot lawn in the neighborhood where you already service 20 other properties. I see that's useful information. And that's pricing information. That's operational information for 2027 information, you know what I'm saying?

10:27So another hidden trap that I discover a lot is especially when people offer multiple services, even if you only stick to like, you kind of stick to one lane, there could be some hidden traps in there. You got to find, you know, a lot of companies, you could be very proud, you could still be profitable while you have a service that is losing money. And you know, a lot of guys that I've helped out in the past, you know, they said, you know, my, my business made money this year. Well, okay, well, which part? Because the thing is revenue can hide a lot of sins. Maybe your mowing division is doing great, but maybe your fertilization program is, is incredibly profitable. But maybe you're in, you know, maybe you have an enhancements division, you know, that's crushing it too. But maybe one of those other divisions is subsidizing another one.

11:29You know, you could have a service generating 200,000 in revenue that could actually be, that you might actually be better off eliminating. And that's why I don't want you asking only is my company, is my company profitable? I want you asking which parts of my company are profitable? What does mowing produce? What does fertilization produce? What does aeration produce? What does landscaping produce, right? You know, if you do snow or irrigation, how much, whatever it is, whatever services you offer them, start separating them. Look at the materials, look at the labor, look at the equipment requirements, look at all the things we're talking about callbacks and administrative burden, the seasonality of it and look at the opportunity cost. Because sometimes the answer isn't, we need to raise prices, we need to raise this service 10%. Sometimes the answer is why the hell are we even offering this service anymore?

12:32And that's a perfectly acceptable answer. All right, I'm going to take a quick break and when we come back, I want to move away from the theory and give you something that you could actually do over the next few weeks. Because if you're listening to this while you're still in the 2026 season, you've got an advantage. And the evidence is sitting right in front of you. So we'll get right into that right after this. Back when I was getting my long-care business off the ground, I was juggling routes, invoices, and customer notes with paper and prayers. It was chaos until I found the art book. Yard book gave me the structure. It helped me track chemicals route efficiently, invoice faster, and most importantly, it helped me grow a profitable business. If you're tired of duct taping your systems together, go to yardbook.com and sign up for free. And if you're ready to go premium, use promo code Pajek to get your first 30 days on me. Hey guys, John Pajek here. If you're a long-care operator, landscaper, hard-scaper dealer, or anyone working in the green industry, I want to highly encourage you to take a serious look at Equip Expo this

13:32October in Louisville, Kentucky, because Equip Expo is the largest trade show and educational event in our industry. For three days, you're going to have the opportunity to see the latest equipment, test drive machines, attend educational sessions, talk to my industry leaders, and network with thousands of contractors from across the country. I've been attending for years and every time I go, I come home with new ideas that make me money, save me time, or help me run a better business. So let's talk numbers. Registration is currently $30, but if you use promo code Pajek, you're going to save 50% and get your ticket for just $15. And if you wait any longer, prices are going to keep going up. So the question isn't whether Equip Expo is worth the money. The question is whether you can afford to miss the opportunities waiting for you there. So head over to Equip Expo.com, use promo code Pajek, and I'll see you in Louisville this October. Link is in the show notes. All right, very quick reminder.

14:33I know we talk about Equip Expo a lot on the show. We go there every year. I'm going to be there, pod row. I'm going to be speaking at the LCR Summit as well as I'm going to be a guest on the morning show Thursday morning. So I'm changing positions instead of being the guy that runs around doing the Q&A stuff, I'm actually going to be on stage this year. But the thing I want to remind you is the ticket price for Equip Expo goes up on the September 10th. After September 10th, it jumps up to a $60 ticket. Now those are still reduced tickets, but the discounts are starting to get smaller and smaller. Now if you use promo code Pajek before September 10th, you can still get your tickets for $15 because right now they're $30. But use promo code Pajek. There's a link in the show notes. You can click on that, get your ticket for $15. Do it quick because on September 11th, prices go up.

15:36And instead of paying the 15, if you use my promo code, you'll still get it for 30, but the ticket price is going up to 60. So I know there's a lot of numbers for different rates and everything, but I'm telling you the best way to get your tickets, the best discount you're going to get is using promo code Pajek at a quick F-sposition.com, the links in the show notes. So anyway, let's jump back into the thing of it today. So here's the thing I want you to do over the next couple of weeks. I'm serious, take notes, okay? Just write this down, jot this down, create a spreadsheet. I don't really care how you do it. But when something happens in your business that makes you say, we can't do this again next year. Write it down. Don't assume you're going to remember it in January because I'm going to pretty much guarantee you're not. You're not going to remember it's going to slip off, you know, the cheese is going to slip off the cracker. And you're going to be like, there was something, but I just can't think of what it was,

16:41right? I've been doing the same thing year after year in my own business. And I've been doing, I've been in business long enough that I could look back at things and say, we underestimated this. We created unnecessary complexity here. Or this worked really well or this didn't work at all. We should have communicated this sooner. This property should have cost more. I mean, there's just a plethora of things from experience that you get, you know? And this will help you identify like what services need to be changed or which processes need to be changed. And sometimes the answer isn't even pricing. Sometimes, you know, you just have to look at the mirror and say, you know, John, the price wasn't the problem. The way you ran it was the problem. And that's important because I'm telling you this, you cannot price your way out of every operational failure. You know, if you have terrible throughout density, raising prices might help the margin, but it doesn't fix throughout.

17:42You know, if my technician isn't properly trained, raising prices doesn't fix production. And if I'm constantly overbooking the company, raising prices doesn't magically create capacity. Sometimes it does because then the bottom people fall off or maybe you actually might force out really good customers that way too, but it doesn't always guarantee that it's going to create capacity. Now another thing is, you know, if I, if my equipment is it maintained and we're constantly losing production time, that's an operational problem, not a pricing problem, you know? So when you're reviewing your 2026, separate it to, you know, what is a pricing problem? And then what's an operational problem? Just don't confuse them. And now we get to the homework, okay? I know classes is in session for kids and whatnot, but this is your homework, okay? This is going to help you build 2027 from the bottom up.

18:43You know, before you decide what you're charging next year, I want you to start gathering the information. I want you to pull together your actual 2026 expenses, you know, pull the financials. Where did, what did the company actually spend? Not what you budgeted, okay? What actually happened? What, you know, that's what we need to look at. We need to look at your actual labor. How much, how many hours did it take to produce the work? Was there overtime? Were you efficient? Where weren't you efficient? Okay? Look at your material usage. What did you actually consume? And what did those materials actually cost you? We look at equipment and vehicles. You look at your repairs, your fuel, your maintenance, your payments, your replacement. And don't pretend equipment is free just because you already own it. Eventually, that machine has to be replaced. So you should have a contingency plan in place. Look at your routes, okay? Look at the efficiency of it.

19:44How much time are you actually producing when you're in the field? How much time are you driving? You know, just take 10 customers scattered across 40 miles. It's a very different scenario than 10 customers inside one subdivision. So when somebody starts boasting about, they have, you know, 100 clients. Well, are those 100 clients all in the same subdivision or those 100 clients? All of our gods bring an earth. Those tell two different stories. Start tracking and looking at like your callbacks and your warranty work. How much did you perform? How much work did you perform that generated no additional revenue, meaning how many times did you have to go back to the same place and not get paid for it, but you had to fix something? You know, now there's going to be some amount and that's normal, but you need to know what it is. You know, I've got a few other things here, you know, not to drone on, but this is why

20:48I said write this down. This is important. People ask me all the time, what should I be tracking? This is the stuff you should be tracking. Okay, don't I'm not getting angry here. I'm just saying it's like I'm saying it with passion because people ask me this all the time and I'm telling you it's like pay attention. I'm dropping, I'm really handing me the keys to to have success. But if you don't follow through with every little bit of it, then it's, you're not going to, you're just not going to succeed. Okay, don't just cherry pick what you think is right. You got to, you have to have a system, you have to have a, you know, so anyway, let me get back to it. I'm sorry. You got to look at your overhead. Okay. What is your overhead? Everything that is required to keep the doors open, whether you're producing work or not, you know, for me, you know, we work eight months out of the year, four months out of the year, everything, we don't shut everything down and it doesn't go away. Our rent doesn't go away and all these other things. We still have to produce even in the winter time.

21:49So you have to compensate for that. You have to think about that. Look at your owner compensation. You know, what does this business need to provide for you? And I'm not talking about someday. I'm talking about now. What is the job of owning this business supposed to produce? Okay. Let's look at profit. I could, I could, I could sit on the owner's compensation for a really long time, but I want to kind of get, I got to keep things moving here. Profit, you know, what returns is the company need to generate beyond paying everybody, including you. Okay. We don't work to break even. We don't work to just, you know, we're short this year. No, we, that's not the point of business. So you have to also kind of look at like what changes are going to happen in 2027. You know, are your wages going to increase? Is your insurance, your rent, your materials? Are you adding a truck? Are you hiring an office manager?

22:50Are you buying software? Are you building or moving into a new facility? Are you adding another crew? Are you know, you're, the point is it's like not only what you already occur is, is, is costs now. We have to look into the future like where are we moving to, right? Even if you're trying, even if you're staying the same, you're not really improving your business at all, it's still going to have a cost to it. Your, your 2027 price has to support your 2027 company and not your 2024 company. Okay. Does that make sense? I hope, I hope that does. So, you know, once we've gathered all of that, now we could start asking how much revenue does this company need to produce? How many production days do we realistically have? How many, how much revenue needs to be produced per day? And then you start breaking that down, you go, okay, well, how much we need per day? How much per crew, how much per truck, how much per technician?

23:53What does this look like per labor hour? What does each service need to contribute? And once we know that, now we can price. Because again, we're not going to say, okay, the whole company needs to make this. And, you know, if you're a mowing division, costs you money and is not breaking even, but your fertilization division is, you have to understand where the money is actually coming from. Because there's no point in, in, let's just say mowing and I'm sorry for beating up on mowing, you can make money in mowing, okay. But what I'm saying is like, it could be easily hidden. Your business could be profitable all, all the way around. But if you really look into your lawn mowing, maybe, or whatever service, okay, if you're tired of me beating up on mowing, you might see that it might not be worth even doing

24:57the mowing. You know what I'm saying? Or whatever service it is, okay, pick your poison. So anyway, once we understand all that stuff and we understand it by division, you know, the different services that you offer within your business. Now you could price. And now it's like, okay, well, based off of what we're, where we're going in 2027, what we want to achieve, how much is actually going to cost us? Maybe the answer for the pricing for the 2027 year is going to be, maybe we just need to increase it by 5%. Well, great. But the reason, now there's a reason behind it, you're not, you didn't just magically pull a number from the ether, right? You didn't pull something out of the sky. I just say, yeah, 7% sounds good. So that's what we're going with. Now you understand the reason, okay? Because the thing is, maybe it's 12%. Maybe, maybe certain customers need 20% increases.

26:01Maybe some services don't need an increase at all. Maybe it needs to drop some customers, you know what I mean? Or maybe an entire service line needs to disappear. And that's the difference between making a pricing decision and announcing a price increase. This is where I want to leave you with something. Stop letting other people price your business. Because here's the thing. You're going to see pricing discussions online. You're going to hear, nobody will pay that. You're going to hear your way too cheap. You're going to hear, if you're not charging $100 now or you're doing it wrong, and somebody else says 125 and somebody says 150, and somebody will tell you that they won't pull their truck out of the shop for listening $200. Wonderful. Run the numbers, not your mouth. Because unless that person knows your labor costs, your overhead, your debit, your, or your debit, your equipment production rates,

27:02your desired compensation, your profit goals, and where you want your business to actually be in the market. Their number doesn't mean anything to your business, and neither does mine. That's why understanding your numbers gives you something incredibly valuable. It's confidence. You're not sitting across from a customer thinking, man, I hope this isn't too expensive. You know why the price is what it is. And maybe the customer says no, and that's okay, because you didn't build the price around getting everybody to say yes. You built the price around creating a sustainable profitable company. So don't wait until January. Don't wait until somebody posts the annual, hey, how much of you guys raising prices this year? And don't pick 5, 7, 10, or any other number just because it sounds reasonable. You've got something right now that you're

28:02not going to have four months from now. And that's fresh information. You're going to remember right now which jobs kicked your butt. You know, you're going to remember where you lost the time. You know, you remember the equipment that kept breaking. You're going to remember the feelings that you had when the customer who required way more attention than you ever priced it into the job. You're going to remember how that makes you feel. But you're also going to remember the good ones. You're going to remember the routes that really clicked. You know, the you're going to remember the days or production was good. You're going to remember the services where everything worked exactly like it was supposed to. So again, write that down. Study it. Because those aren't just memories from 2026. That's data for 2027. So build the budget. Know your costs. Understand your production rates. Determine what you need the company to provide for you. You know, build in that

29:07profit and then build your pricing around reality. Run your numbers, not your mouth. And once you run those numbers, you walk in confidence. So keep pushing through and God bless. Thanks for spending some time with me today. If something in this episode made you think differently about your business, don't just leave it here. Take that idea, put it to work and see what it can do for you. And a special thank you to our friends at Yardbook for their continued support of profits with PayJack. If you're looking for tools to help manage your long-care business, check them out at Yardbook.com. You could try a paid Yardbook subscription free for 30 days by using promo code PayJack. You'll find additional resources from today's episode in the show notes. Until next time, keep pushing through and God bless.