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View Full Version : Tip Of The Day - 12/6/05 - Raising Prices


Sean Adams
12-06-2005, 06:44 PM
Another year has passed...assuming you have sat down and looked over your numbers this past month as well as for the whole season, you should be able to tell whether or not a price increase is required. A new year often times means growth, more equipment, more travel time (gas), maybe more employees or giving employees raises, etc.... when your costs go up you should be able to justify to your clients the need for a price increase. Now how you go about doing that is the trick....simply invoicing them a new amount won't cut it, a voice mail isn't going to win you any fans.... a phone call speaking directly to them, or even better, a nice form letter, explaining the need for a price increase is the way to go. But realize that your price increase should not be too significant unless part of your objective is to weed out clients you do not want. If you made the mistake of mowing for Mr. Jones in 2005 for $25, don't think he will be thrilled if you send him a letter saying his price is going to change to $45 per mowing. A slight increase for all clients across the board (if there is room for it - handle each client individually) will probably give you the extra added and needed revenue heading into the new season.

1MajorTom
12-06-2005, 08:51 PM
I have read on here where some members do not inform their customers of any price increases, they just sent the bill at the end of the month, and that's how the customer finds out. We however, do send them a letter in March. It's professional looking, short and to the point.
I would be interested in hearing if anyone does go the route of telephone calls, as I'm not too keen on that idea at all. Seems like it would be real easy to open up a can of worms by having them on the phone where they could immediately complain about the increase.

olderthandirt
12-06-2005, 09:07 PM
If it not on paper its might as well not be there

SodKing
12-06-2005, 09:28 PM
I am so expensive I haven't rasied prices i years...

Though I did just come from a meeting at a condo where I told them they shold expect a 4-6% increase in pricing next year.

DLS1
12-06-2005, 10:03 PM
I send letters beginning of February to everyone even if they don't have a price increase. I ask everyone to let me know by last week of February if they want the service again this year. Gives them time to mull it over vs asking them over the phone. So as of March 1 I know how many old customers I still have before I start advertising to fill up open spots.

Will be more increasing prices next year 10 - 30%.

1MajorTom
12-06-2005, 10:22 PM
I send letters beginning of February to everyone even if they don't have a price increase. I ask everyone to let me know by last week of February if they want the service again this year. Gives them time to mull it over vs asking them over the phone. So as of March 1 I know how many old customers I still have before I start advertising to fill up open spots.


Very good, we do exactly the same thing, we give them till March 15th which gives them roughly 2 weeks to decide.

bobbygedd
12-07-2005, 12:11 AM
what services do you use, that advise you of a price increase, in advance? god, i could see it now, you guys, approaching a client, looking down at the floor, stuttering, like u just committed a crime, "umm, mrs smith, ummm, if it would not be too much trouble, ummm, i was thinking...." i increased everyone this year, and caught crap from only ONE CUSTOMER, who then cancelled, and came whimpering back in mid season. i had another one, who i increased from $28 to $30. she goes, "no, i won't allow it." i quickly jumped back at her, " I WASN'T ASKIN YOU, I WAS TELLING YOU!." she goes, "oh, ok"

DLS1
12-07-2005, 12:21 AM
what services do you use, that advise you of a price increase, in advance?

Called looking at last years overhead,etc. using Quickbooks and deciding if I need to increase prices.

Is your method you need two increase your beer intake by two beers each time you mow a customer next year so you determine how much two beers cost and increase it by that amount. :D

1MajorTom
12-07-2005, 12:25 AM
Get off your high horse and quit with the act, no one buys it anyhow.
Cable, gas, and water, all notify in advance of any rate increase. Credit card companies always notify in advance when they will be changing their interest rate.

what services do you use, that advise you of a price increase, in advance? god, i could see it now, you guys, approaching a client, looking down at the floor, stuttering, like u just committed a crime, "umm, mrs smith, ummm, if it would not be too much trouble, ummm, i was thinking...." i increased everyone this year, and caught crap from only ONE CUSTOMER, who then cancelled, and came whimpering back in mid season. i had another one, who i increased from $28 to $30. she goes, "no, i won't allow it." i quickly jumped back at her, " I WASN'T ASKIN YOU, I WAS TELLING YOU!." she goes, "oh, ok"

captaingreen
12-07-2005, 12:31 AM
I send out a letter in February that reviews services for the year and rates. I don't like the idea of calling everyone either.

DLS1
12-07-2005, 12:32 AM
Get off your high horse

Don't you mean low Shetland pony for the little fella. :D

Drew Gemma
12-07-2005, 01:52 AM
well lets see a copy of a letter that everyone uses. Cause I am feeling lazy and don't want to make one from scratch.

scraper69
12-07-2005, 07:50 AM
yea im curious to see these letters... Are they just contracts with price increases on them or what. Dont they sign physical contracts in FEB. or just read a letter, and call you with a verbal.

Sean Adams
12-07-2005, 10:33 AM
A letter is definitely the easiest way - gives them time to think, it's in writing for them to see, etc... I feel a phone call is appropriate, but not required depending on the client and the relationship you have with them....

"Hi Mr. Jones, it's Sean Adams from Gedd Lawn Cutters. How are you?"

"Not bad, what's up Sean? How's that silly owner of your company?"

"Oh, Mr. Gedd - he's OK - he's actually in Colorado right now touring the Coors Light factory - some promotion for loyal customers."

"So what's up Sean?"

"The reason for my call is to discuss with you our services for the upcoming season. As you know we do our best to keep our prices as reasonable as possible. It has been a few years since we have had any sort of price increase. After evaluating our increased expenses in 2005 we have made the decision to raise our prices 15%. However, I wanted to call you personally and let you know because you have been such a great client over the years, we are making an exception and only increasing your price 7%. Your mowing price has been $55 for the past three years. With the normal increase your price would be $63.25, but we are keeping your price at $59."

"I Understand Sean - the price of doing business. You guys do a great job and the stories I hear from that Gedd guy each time he comes here and mows is worth whatever you charge."

"Thanks Mr. Jones, I appreciate your time and if you ever have any questions or need anything, give us a call, or leave your complimentary shovel outside your back door and we will do whatever we can."

git er done landscaping
12-07-2005, 12:52 PM
sean. just when i thought you were all work and no play. thanks again for all the advice and a good laugh all at the same time!:D

Critical Care
12-07-2005, 05:33 PM
If you made the mistake of mowing for Mr. Jones in 2005 for $25, don't think he will be thrilled if you send him a letter saying his price is going to change to $45 per mowing.

Hey, if you’re running that far behind the pack you really have no other option other than to get out of the race or make the big leap from $25 to $45 – if that’s where the rest of the pack is.

In February or early March I send out contracts, along with a cover letter that explains any changes in service, or prices. Price is just one paragraph, not the whole letter. I most certainly would rather lay it on the line in writing than verbally on the phone. You know if you call up clients with the “bad news” you’ll more than likely get a few who will express their feelings to you vocally, “I’m on a fixed income”, “My medical bills”, or “My daughter’s graduation.” Do you want to hear this?

No thank you, I’ll do it in writing – one paragraph along with the contract, period.

Sean Adams
12-07-2005, 05:41 PM
$25 to $45 is a leap for sure...but if the client makes sense to your business (more work besides mowing) and fits nicely in your route it may be worth finding a way to gently raise the price and keep making money from them elsewhere

and like I said, the phone is not for everyone and not for every client.... But I had several clients who were business owners themselves and they respected and appreciated the phone call versus a letter... just dpends who you are dealing with

Soupy
12-08-2005, 04:13 PM
Why do you guys send letters out asking if they are coming back? Why ask a customer to rehire you? If they don't want you back, they will let you know all on their own.

In my signed agreements it states that services is continuous from year to year. It also states that prices may rise no more then 5% each year without a new agreement.

Critical Care
12-09-2005, 05:31 PM
Why do you guys send letters out asking if they are coming back? Why ask a customer to rehire you? If they don't want you back, they will let you know all on their own.

FWIW, I don't send out letters “asking” if my customers are coming back, but I do send out new contracts every year. There are a lot of businesses that operate on annual contracts, and since things are always changing with my clients as well as with my own business, it's just a way for me to keep up and implement new changes. Besides mentioning price and changes, my cover letters generally will also touch upon specific ideas, or additional services that could improve their landscape. Its simply just a way of being friendly while creating more business.

$25 to $45 is a leap for sure...but if the client makes sense to your business (more work besides mowing) and fits nicely in your route it may be worth finding a way to gently raise the price and keep making money from them elsewhere...

True. At one time my intentions were that price increases would be equally passed on all clients, but as time went by those intentions just didn't hold up.

SouthernYankee
12-09-2005, 09:04 PM
A letter is definitely the easiest way - gives them time to think, it's in writing for them to see, etc... I feel a phone call is appropriate, but not required depending on the client and the relationship you have with them....

"Hi Mr. Jones, it's Sean Adams from Gedd Lawn Cutters. How are you?"

"Not bad, what's up Sean? How's that silly owner of your company?"

"Oh, Mr. Gedd - he's OK - he's actually in Colorado right now touring the Coors Light factory - some promotion for loyal customers."

"So what's up Sean?"

"The reason for my call is to discuss with you our services for the upcoming season. As you know we do our best to keep our prices as reasonable as possible. It has been a few years since we have had any sort of price increase. After evaluating our increased expenses in 2005 we have made the decision to raise our prices 15%. However, I wanted to call you personally and let you know because you have been such a great client over the years, we are making an exception and only increasing your price 7%. Your mowing price has been $55 for the past three years. With the normal increase your price would be $63.25, but we are keeping your price at $59."

"I Understand Sean - the price of doing business. You guys do a great job and the stories I hear from that Gedd guy each time he comes here and mows is worth whatever you charge."

"Thanks Mr. Jones, I appreciate your time and if you ever have any questions or need anything, give us a call, or leave your complimentary shovel outside your back door and we will do whatever we can."

that was the funniest thing I have ever read on this site

captaingreen
12-10-2005, 09:46 PM
In my letter I just inform them that the price has increased to x amount and service is scheduled to begin late March/early April, if for any reason you need to cancel or make any changes to the service please call.

Lux Lawn
12-10-2005, 10:31 PM
In my letter I just inform them that the price has increased to x amount and service is scheduled to begin late March/early April, if for any reason you need to cancel or make any changes to the service please call.


This is what I do as well.I also include last seasons price and the year they had there account raised last.

Puller504
02-22-2006, 07:07 AM
This actually happened to me in 2005. An elderly couple told me that if I were to increase my fee of $47.50 per mowing to $50.00 or more, they would cancel me after 15 years of reliable, reasonable service! This client is the most miles away I travel from my shop to mow. Fuel prices alone rose over 20% in 2005. I mowed at 47.50 per mowing through June, then knocked on their door after the last cut in June. I informed them that the costs of my service was being raised as of July 1st. Took my time explaining the fuel cost increase and they accepted a price increase (described a a fuel surcharge) of $5.00 PER MOWING. They think of it as a $5.00 per mowing fuel charge and NOT AN INCREASE to $52.50 per mowing. They asked if gas prices went back down, if I'd remove the fuel charge! Yessir, I'll drop the fuel charge when gasoline CONSISTANTLY costs below $2.00 a gallon. Don

Freshcut Lawn Care
02-23-2006, 01:12 PM
More good stuff here everyone folks. Thanks!

We are now starting to sign 3 year deals vs. 1 year deals with some of our Commercial Accounts. This makes it easier for them (and us).

In this case, the prices have increased somewhat to reflect the longer term, to protect ourselves, from our own increased costs.

We do have a ceiling on Fuel Prices in our quote, which will impact the price, should the gas prices reach a certain threshold.

Just to let you know, we did not add additional fees last season, when Fuel Prices went through the roof. (I did consider it however)!

Many customers were actually surprised and were quite pleased, when I mentioned it to them - (nicely of course)!

I feel this went a long way into cementing our partnership with these customers!

We do work very closely with our customers and I talk to them quite regularly, which helps a lot I believe. When I have increased rates, they always seem to understand, knowing we do everything we can to make them happy!

We are now better protected.

I like the on-going agreements and stating that prices may increase by up to 5% annually, before a new contract is required. Great idea Soupy!

In closing, I feel if you go to the wall for your customers, they will be happy to pay you what you are worth!

All the Best folks! Wishing you all a great 2006 season!

Bel Air Bob
03-07-2006, 07:57 PM
Calling is out of the question, too time consuming. I do believe you should notify of any increase. It's only right. You had an agreement last year, so if there is any change, you owe it to your customers to let them know. A well written letter explaining some of your costs tactfully is a good way. Most customers will understand and be happy to stay with you. If they want to find someone cheaper, so be it. If I were a customer, and got a bill with a price increase, I would not be happy if I hadn't been told ahead of time.

BRIDGE577
03-08-2006, 11:53 PM
I am reading all this stuff and it sounds great. But Do you guys mow all year round or somthing why wait untill Febuary?

We send out contract renewels with our last invoice for mowing, we have kept our prices the same for three years and just now did a cost of living increase we explain the rising cost of gas and oil,and everyone has understood. But we usually tell the customer if we get the contract back within 30 days there will be no increase in price as a way of showing our gratitude.

This way you don't even mess with them untill spring you can concetrate on new customers, and advertising. In Ohio it goes from winter to spring so fast if I had to chase down last years customers and not work on new ones I wouldn"t get very far.

prizeprop
03-10-2006, 11:17 PM
Why do you guys send letters out asking if they are coming back? Why ask a customer to rehire you? If they don't want you back, they will let you know all on their own.

In my signed agreements it states that services is continuous from year to year. It also states that prices may rise no more then 5% each year without a new agreement.This is the one of best things I have learned from this site, someone posted it at the end of 2004, it might have been you soupy. Thanks who ever it was. I have the year to year renewal until cancelled with 5% max increase to cover our increased operating costs clause implemented in all our clients service agreements now. To much time to notify customers each year and people wait until the last minute to send back agreements each year. Out of sight out of mind, The old way I had to have them hire me all over again if you think about it. Spent to much of Feb and March resigning old customers.

wheebil
03-11-2006, 12:18 PM
I have read on here where some members do not inform their customers of any price increases, they just sent the bill at the end of the month, and that's how the customer finds out. We however, do send them a letter in March. It's professional looking, short and to the point.
I would be interested in hearing if anyone does go the route of telephone calls, as I'm not too keen on that idea at all. Seems like it would be real easy to open up a can of worms by having them on the phone where they could immediately complain about the increase.

Jodi, I agree completely. Last year I sent a form letter to each customer and had no problems with the one or two dollar increase per lawn. I do not call them because they have the opportunity to play to your feelings or give you a guilt trip. Senior citizens are good at that.

indy2tall
08-29-2006, 10:27 PM
Don't you mean low Shetland pony for the little fella. :D

LOL :laugh: :laugh: :laugh: :laugh: Whew that was brutal! :laugh: :laugh: :laugh: :laugh: :laugh: :laugh: :laugh:
Redneck polo = When Bobby rides the little horse swinging his shovel at the customer.

TGK
11-08-2006, 09:10 AM
This reminds me of the commercial where the guy sees his client in Vegas, and raises the price from 30 to 75. Im still scowering the strip!