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No matter if you’re a new or established business, Christmas light pricing is one of the most challenging aspects that determines success.
Stop guessing whether or not your Christmas light pricing is right, and use this simple guide to take out the guesswork, get your prices right the first time, and maximize profits.
While Christmas light pricing might seem complex, this guide gives you everything needed to simplify the process and find the right prices with ease.
Use this complete Christmas light pricing guide to maximize profits based on:
Use this complete Christmas light pricing guide to properly price services the first time with minimal stress and maximum profits.
Tapping into local market insight is one of the best ways to increase selling effectiveness.
To start, think about your ideal or favorite client and answer questions like:
Remember, the more detailed you are with your answers, the more insight you’ll have into your ideal client, which better increases selling effectiveness.
Next, think about what your ideal clients want. Send a survey to your favorite clients asking questions like:
Use the information gathered from these surveys to find commonalities and trends. For example, are there specific installation packages that sell better?
Plus, you can use these answers to pinpoint the exact days of your top selling season.
Leverage these local market insights to stand apart from the competition and increase conversions.
Once you’ve tapped into local market insights, you can use this information to sell more effectively in your marketing efforts:
Before you can get started on anything else, you must first decide how you’ll tackle Christmas lights.
For example, you can:
These are just a few of the many ways many Christmas light businesses choose to tackle Christmas lights. However, most businesses choose between one of these top methods.
Let’s talk about why these methods are the most-used and how you can decide which one is the best choice for you.
By far, renting out professional Christmas lights every year is one of the most common, standard practices.
When you choose this option, you can choose the professional Christmas lights you want to install, and then charge clients a fee for renting the lights for the season.
Then, when the lights are uninstalled, you can store and keep them for next year to rent out again and make your money back.
Though, keep in mind, in order to make profits your first year, it’s important to get bulk deals on professional Christmas lights.
Also, consider joining an organization, like CLIPA (Christmas Light Installation Pros Association), to gain access to better prices.
Additionally, you’ll need to find a reputable Christmas lights supplier. A great vendor will provide you with sample kits to show clients. Plus, they’ll help you order the right amount of lights.
Pro Tip! DO NOT get incandescent bulbs. These bulbs are notorious for spiking energy bills and shattering when you store them.
Some new Christmas light businesses don’t have the storage space to properly store Christmas lights.
For this reason, some businesses choose to sell new light strands. Then, at the end of the season they’ll either throw away the lights or give it to the client for the following year.
In the following season, they’ll sometimes reuse the same lights they sold the clients in the previous year.
Sometimes, business owners choosing this distribution method will opt for cheaper, more cost-efficient lights that aren’t necessarily professional lights. After all, they only need to last until the end of the season.
If given the choice, I don’t recommend using this method. However, if you’re in a pinch, it’s more reliable than using the client’s lights.
Here are a few cons to consider before choosing this option:
Many new Christmas light installation businesses use the clients’ existing Christmas lights.
While many clients will likely appreciate this more cost-efficient option, I don’t recommend it.
Using the client’s lights is one of the least reliable choices because:
Even though it might be tempting to forgo the upfront expense of purchasing professional Christmas lights, renting the lights year after year more than pays for itself.
Simply increase Christmas light pricing to accommodate for the additional cost, and explain to clients why this is the best option for them.
Plus, even if you don’t have an office building, you can easily find an affordable storage facility to properly stow away the lights for the following year.
Calculate the break-even point to discover the minimum you need to charge to accept a Chrismtas light installation job.
Do this by adding up all of your monthly overhead costs:
Add up ALL costs associated with running the business to find the total monthly overhead costs.
Next, multiply these numbers to find the total estimated labor costs:
Then, incorporate the previous calculations into this formula to calculate the required total monthly revenue (i.e. break-even point):
Total Monthly Business Overhead Expenses + Total Estimated Labor Costs = Total Monthly Revenue Required
As always, verify your CPA (Certified Public Accountant) of your estimated break-even point.
By the way, you can instantly track all of these overhead costs (and more) using the best lawn care software.
You’ve found the break-even point, and now it’s time to choose how to charge for Christmas light pricing.
There are many ways of charging for Christmas light installation, but most businesses choose to charge by the foot.
Plus, charging by the foot is an easy, effective way to simplify the process and increase profits.
Also, as you’re choosing how much to charge by the foot, don’t forget to take home size and type into consideration:
Now, you know how you want to charge for Christmas light pricing, so it’s time to calculate project costs for the job.
First, add up the following job costs to find the total project material expenses needed:
Remember, every job is different and all of these costs are on a job-by-job basis. Also, don’t forget to add ANY and ALL Christmas light installation costs.
You can easily track all of these costs on-the-go using Service Autopilot.
Use this formula to calculate the total project materials cost:
Total Project Material Expenses + (Total Project Material Expenses x Profit Margin) = Total Project Materials Cost
Then, multiply these number to find total labor costs:
Next, incorporate the previous calculation into this formula:
Total Project Materials Cost + Total Project Labor Cost = Total Project Cost
Now that we know the project costs, it’s important to plan for scalable growth by setting profit goals to incorporate into the Christmas light pricing.
Use this formula to set the right profit goals using net income:
Net Income = Total Revenue - Material Costs - Labor Costs - Overhead Costs
Next, incorporate this calculation into the following formula:
Profit Margin = Net Income / Total Revenue
Don’t forget to test different profit goals to discover the best target for your Christmas light business.
Keep in mind, sales goals increase with profit margin goals.
In order to set the right profit goals, keep it achievable, yet ambitious.
The best way to ensure you’re keeping it reasonable is by comparing your Christmas light pricing to the competition. This ensures it’s not too low or high.
Although, don’t copy the competition’s prices. After all, their costs and goals aren't the same.
However, this comparison will give you a general idea of whether you’re within a reasonable price range.
Before comparing your prices to the competition, remember to incorporate your goals into the prices first.
Prior to implementing the new Christmas light pricing, it’s essential to consult with a trusted CPA (Certified Public Accountant) for further verification.
This is a necessary step in catching any factors you forgot to consider. Plus, they can provide a clearer idea of the best pricing for the business.
Never forget, finances are what make or break the foundation of any business. Even though CPAs require a little upfront cost, this is NOT a step you can skip!
Other than increasing prices, the key to maximizing profits is to save time and streamline operations by using the best all-in-one software solution.
With Service Autopilot, you’ll have the opportunity to quickly conquer everyday tasks like:
Service Autopilot gives you and the team the time needed to focus more on important job tasks - allowing you to work ON the business, rather than IN it.
Instant invoicing
Better scheduling
Manage your clients and employees all in one system
By far, the most effective way to improve the Christmas light pricing process is by using client feedback.
Here are a few great ways to get client feedback:
Remember, first increase Christmas light prices on your least profitable clients. Then, send out a survey to discover if they’re still happy with your services.
Finally, use your client feedback to improve the Christmas light pricing process for more profitable clients.
Finally, when you use this ultimate Christmas light pricing guide, you’ll be able to grow your business into a shining success by accomplishing goals and maximizing profits.
With this guide, you can ensure you’ve considered all necessary factors going into pricing. Also, the guide helps to properly implement and improve the process of the price increase.
At last, you have everything needed to become a glaring beacon of success with consistent, scalable growth for many years to come!
Related: How to Transition from Lawn Care to a Christmas Light Business
Originally published Oct 7, 2021 7:00 AM
Tags: Business Operation, Featured Post
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