Latest / Scaling Up with Fexingo: How Small Businesses Become Mid-Market Companies / How This Landscaping Firm Scaled Past 30 Million with a Pricing Model Rethink
Transcript
- Lucas: So there's this landscaping company in Ohio, family-owned, that just crossed thirty million in revenue. And the reason I wanted to talk about them is that they didn't get there by buying more trucks or hiring more crews. They got there by changing how they charge. Luna: Okay, that's interesting. Because most landscaping firms I've seen are stuck in hourly billing, and that feels like a trap. Lucas: Exactly. And this company, we'll call them GreenScape, they were doing about twelve million a few years ago, all residential, hourly. And the owner realized that every hour they billed, there was a ceiling. You can only add so many crews before the overhead starts eating you alive. Luna: So what did they do? Just switch to flat-rate overnight? Lucas: No, it was a two-year process. They started with their commercial contracts, because those were the ones where clients actually wanted predictability. They moved to a flat fee per service—say, five thousand for a monthly maintenance package—and they promised a ninety-day money-back guarantee if the client wasn't happy. Luna: A money-back guarantee on a service contract? That's bold. Did the clients actually use it? Lucas: Almost none did. But the guarantee was the thing that got them to sign. The owner told me that the fear of switching was bigger than the fear of the price, so they removed the risk. And once they had a few anchor clients on flat-rate, they could start benchmarking their costs. Luna: So how did they figure out what to charge? That's the hard part, right? Lucas: They went back through two years of job data, every single invoice, and they calculated the actual cost per property, per service, including labor, fuel, equipment wear. Then they added a thirty percent margin on top, and they built in a buffer for weather delays and overruns. Their average ticket price went up about twenty percent, but their profit per job went up almost double. Luna: And the clients didn't balk at the higher price? Lucas: Some did. They lost about fifteen percent of their commercial clients in the first year, but the ones who stayed were the ones who valued reliability. And because they had fewer, bigger contracts, they could actually staff better and show up on time, which fed the retention. Luna: So the pricing change actually improved their operations. That's the flywheel. Lucas: Exactly. And that's what let them scale to thirty million without tripling their headcount. Their revenue per employee went from about eighty thousand to a hundred and forty thousand in three years. Luna: That's a big jump. How did the employees react to the change? Because I imagine some were worried about how their pay would be affected. Lucas: They tied crew pay to productivity, not hours. So instead of paying overtime, they paid a flat rate per job, and crews could finish early and still get the full amount. The efficient crews saw a pay bump, and the slower ones had to adapt. Turnover actually went down, because the best people were making more. Luna: That's a smart move. But I'm curious—what about the residential side? Did they switch that too? Lucas: They did, but more slowly. They kept the hourly model for one-off jobs like a one-time cleanup, but for recurring maintenance, they pushed flat monthly packages. That way they got steady cash flow and could plan their crews better. Luna: And that steady cash flow probably helped them take on bigger commercial projects without worrying about the feast or famine cycle. Lucas: Right. And the interesting thing is, once they had a few large commercial accounts, they could negotiate better rates with their equipment suppliers because they were buying in bulk. That's another margin layer. Luna: So the pricing model was really the catalyst for everything else. Lucas: Yeah. And I think there's a lesson here for any service business—not just landscaping. If you're billing by the hour, you're capping your upside. You're trading time for money, and there's a limit to that. Luna: It's interesting you say that, because a lot of our listeners are in that exact position. And I think if they take one thing from today, it's that pricing is a strategic lever, not just a number you put on an invoice. Lucas: And if that's the takeaway, then we've done our job. And hey, speaking of doing the job, this is the part where we remind you that this podcast is ad-free, and it stays that way because of listeners like you. If today was useful, you can keep it going by buying me a coffee at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small way to say thanks, and it genuinely helps us keep doing these deep dives. Lucas: So, back to GreenScape. Once they had the pricing nailed down, the next challenge was scaling the estimation process. Because you can't have a salesperson making up numbers on the spot. Luna: Right, they needed a system. What did they do? Lucas: They built a simple spreadsheet first, then moved to a software tool that could calculate the flat fee based on property size, number of beds, tree count, all that. Now their estimators can give a quote in fifteen minutes instead of two hours. Luna: Fifteen minutes. That's a huge efficiency gain. And it probably also reduces the chance of underestimating, which is where you lose money. Lucas: Exactly. They also trained their estimators on the cost data, so they understand why the price is what it is. It's not just plugging numbers into a tool; they can explain it to the client if there are questions. Luna: That's key. If your sales team can't justify the price, they'll start discounting, and that's the death of a pricing model. Lucas: Exactly. So they set a rule: no discounts except in rare cases, and those need approval from the owner. They also started offering a premium tier with more frequent visits and seasonal plantings, which gave them an upsell path. Luna: So they're not just raising prices; they're giving clients a reason to spend more. That's smart. Lucas: And the results speak for themselves. From twelve to thirty million in about six years, with margins up from around eight percent to fifteen percent. Not bad for a family business. Luna: That's a solid case study. What would you say is the biggest mistake other firms make when trying to switch to value-based pricing? Lucas: Probably doing it all at once without data. GreenScape spent six months analyzing their numbers before they changed anything. They knew their true costs, so they could set prices with confidence. If you just guess, you're either going to price yourself out or leave money on the table. Luna: So the lesson is, know your costs before you set your prices. Lucas: That's the foundation. And then, be patient. It took a couple of years to fully transition. They didn't flip a switch; they eased clients into it, and they communicated the value. That's what made it stick. Luna: I think that's a great place to leave it. Thanks for walking us through the numbers, Lucas. Lucas: Thanks, Luna. For anyone listening, if you're stuck in an hourly model, it might be worth looking at your data tonight. You might find your next growth lever there.