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View Full Version : When to Raise Prices?


MOturkey
08-21-2005, 08:29 PM
Despite the recent hikes in gas prices, I've not raised any prices this year. I started my business last year, and didn't want to raise prices after only one year, as I thought that wouldn't look too good. Additionally, I bid high enough originally, that I was still making the margin I was originally shooting for.

However, I feel I do need to raise them marginally next season, particularly if $2.50 or higher gas is here to stay, as most reports state. My question is whether it is wise to state the intent to increase pricing with the last statement this fall, or wait until contacting the clients before the first cutting next spring?

I can see two ways of looking at this. Tell them this fall, and they would have all winter to consider whether or not to ask for other bids, but on the other hand, out of sight is out of mind to most people, so I'm thinking perhaps they are just going to forget all about it until they get the first statement next spring.

On the other hand, waiting untll next spring to tell them would make it more difficult for them to locate someone else, if they thought I was high enough already, but I also thought, looking at it from the customer's standpoint, that waiting until then might make them feel they are being put on the spot, and make them more inclined to feel that way.

By the way, I'm not thinking of raping these people, probably just a 5-8% increase. A couple of accounts I know won't say a word because they are extremely happy with my service, but a couple are commercial accounts that might be more interested in the bottom line than the quality of service, and I'd really hate to lose these.

Anyhow, I'm just curious what all of you think, and what approach you've used in the past. Thanks in advance. Neill

1MajorTom
08-21-2005, 08:35 PM
We have never done a price raise in the fall. Why leave a possible bad taste in the customers mouth over the winter, and a long time to maybe find someone else if they are real dollar conscious? We've always done our price raises in the spring. I don't see how a customer can be made to feel put on the spot with a spring price increase, it's the start of the new season, they should understand.

nobagger
08-21-2005, 08:45 PM
Dido! why raise prices in the fall when there is only a few weeks left, at least around here. I thought about it a few weeks ago but then I said why risk loosing a customer that may be good for a fall clean up and I would try to make some of it up with new fall clean up customers and exisitng ones.

dkeisala
08-21-2005, 08:51 PM
I just raised prices 4% to 10% and a couple even higher than that. Nobody has had one negative thing to say about it.

I think the beginning of the season is a great time to raise prices as well as August/September when people are trying to squeeze in that last minute vacation, getting kids ready for school, etc. But the truth is, you should raise your prices when you feel the need. If someone is going to cancel, they're going to cancel, it doesn't really matter when a price increase comes. And if someone does cancel over a 5% to 8% increase, you probably don't want them as a customer anyway.

That said, I probably wouldn't raise my prices in December, January or February but I think any other time of the year would be perfectly acceptable.

6'7 330
08-21-2005, 09:09 PM
However, I feel I do need to raise them marginally next season, particularly if $2.50 or higher gas is here to stay, as most reports state.
used in the past. . Neill
Add a fuel surcharge to your contracts next season.


My question is whether it is wise to state the intent to increase pricing with the last statement this fall, or wait until contacting the clients before the first cutting next spring?
We inform accounts of rate increases at contract renewal time in the spring.
It is the start of a fresh season,and Rate increases are pretty much expected.

nobagger
08-21-2005, 09:12 PM
I just raised prices 4% to 10% and a couple even higher than that. Nobody has had one negative thing to say about it.

I think the beginning of the season is a great time to raise prices as well as August/September when people are trying to squeeze in that last minute vacation, getting kids ready for school, etc. But the truth is, you should raise your prices when you feel the need. If someone is going to cancel, they're going to cancel, it doesn't really matter when a price increase comes. And if someone does cancel over a 5% to 8% increase, you probably don't want them as a customer anyway.

That said, I probably wouldn't raise my prices in December, January or February but I think any other time of the year would be perfectly acceptable.
Well I agree with some points, but why when kids are going back to school? Yes raise them if you absolutly need to but with fuel prices being the big talk latley I feel that most people will understand but some may say "thats the last straw" There are a lot of gas stations around but they are all priced within a few cents difference, so everyone is stuck paying pretty much the same price, but there are tons of llc legit and not so legit and I think some people will jump ship for a buck or two difference. JMO :waving:

Scotts' Yard Care
08-21-2005, 09:30 PM
We're running efficient enough right now that the gas prices only hurt a little :cry: If they hold or continue to rise as they seem to be doing, then we'll simply have to raise prices to compensate. If we have a good long fall
we should mow up into Nov. and then do fall clean ups and leaf work through the rest of the month but our full schedule mowing is only going to last about two more months or so.

Lake Claire Lawn Ranger
08-21-2005, 10:13 PM
I wouldn't (and won't) say anything until next season. Then I think a lot of us will be using a fuel surcharge.

HOOLIE
08-21-2005, 10:36 PM
I'm planning on an increase in September. I was already planning on raising prices next Spring, I may do that as well.

Why is everyone so afraid to raise their prices? Virtually every other industry/business is doing it, why wait for 6 months?

DSIM
08-21-2005, 10:36 PM
I think now is a good time to raise prices because of the fact that there are only a few weeks left of mowing the customer would probably rather keep the same service instead of trying to shop around for another lawn service that is likley booked up anyway.
In the spring there will be a hundred doorhangers to choose from if they want to find someone else because you raised your prices.

Precision
08-21-2005, 11:11 PM
fuel surcharge is ok, but it doesn't compound.

by just raising the rates 5%, when you raise them again next year 5% you are way better off then with a surcharge. Besides if the fuel prices drop back down to $2.00 or so, so much for the fuel charge. Or get really ready for the customer complaints.

$100 per month 5% increase $105 year 1
$105 per month 5% increase $110.25 year 2 personally I would round to 111
$110.25 per month 5% increase $115.76 year 3 round to 116
$115.76 per month 5% increase $121.54 year 4 round to 122

if you go with the surcharge then you will be back down to 100 if gas prices fall and next year you have to give a 11% increase to get back to where you would have been if you just increased rates each year.

ajlandscaping
08-21-2005, 11:12 PM
are gas prices really that bad that you NEED to raise your prices?

i mean your complaining about 2.50/gal but over by me im paying 2.75/gal on average recently and their expecting it to go up to closer to 3.00/gal before labor day hits and then slowly go down. which with stations around here will take along time to get close to what your paying now.

if you read some past threads on gas some are a go on increases on price to customers while others disagree. i only say give a fuel surcharge if gas goes up like 25 cents in one month other then that i don't think you should just because gas prices fluctuate all the time even before it has hit the 2.00+/gal.

dkeisala
08-22-2005, 01:44 AM
Well I agree with some points, but why when kids are going back to school?

Because people are busy, got lot's on their plates this time of year and they're probably less likely to shop around. Plus, there's still plenty of time left in the season so it's not like your'e raising their price in October.