Have you ever ordered a cheese pizza and asked them to throw in some pepperoni for free? Of course you haven’t.
Have you ever checked out the cost of the pepperoni versus the cost of the cheese?
Let’s have a look, shall we? I grabbed a menu from a local pizza joint, and here is the cost breakdown. A small cheese pizza is $7.99. Each extra topping is $1.75. It breaks down like this: If the cheese pizza is $7.99, an extra topping is 22 percent of the pizza price. That’s almost a quarter the cost of a pizza now dotted with little round pieces of pepperoni. At a glance, $1.75 seems like a lot of money for just a few measly pepperoni pieces. Holy extra cheese, Batman!
Now taking this example to the extreme, would we buy the pizza from the pizza joint and then go to Wal-Mart and buy the pepperoni? It makes perfect financial sense since you can buy a 6-ounce bag of pepperoni for $2.97, which has 84 pieces of pepperoni in it. That’s probably enough for seven pizzas. If you break it down, that’s only 42 cents per pizza. Sounds like a good deal to me. So why in the world would a pizza joint charge such an extravagant amount of money for something you can buy yourself for a fraction of the price?
Because they can, that’s why! It’s all about convenience. No one is going to drive all over town checking the price of pepperoni to dress their pizza with additional toppings.
This one example caused me to think about the extra toppings in our industry — the enhancements or the extras. When it comes to replacing dead plant material, removing trees, installing plants, additions to design/build projects or any other request above and beyond the contracted work, we can and should charge a premium for this work.
I’m not talking about taking advantage of the customer. I’m talking about taking care of the customer. Just like the extra toppings on a pizza, most likely your customer isn’t going to call 10 other landscape companies to perform extra work. If they trust you, and you are fair with your pricing, they will be happy to give you the work. They will rely upon you even if it is a little more costly than the base contract work.
Remember there is value here because the customer is using the same company for the work. First, they save time by not having to shop around. Second, they get consistent service. Third, they get the work done in a timely manner. It just makes sense. These benefits justify being able to charge a premium for enhancements or add-on services.
As for the pricing structure, you will have to determine what your market will bear. Just like the pepperoni, we have that same opportunity in our businesses.
We have all had the customer who said things like, “Your price is too high. I can buy those same plants up at Joe’s Garden Center for half the price.”
Next time you hear something like that, tell them to head to Wal-Mart and pick up some pepperoni.
That’ll be our little inside joke.