old customers, same old price

[bobbygedd]

i know there was a time when we were all new at this, and did work very cheap, and didnt do a real good job....etc. well, when i started about 7 yrs ago i didnt know the going rate for everything, and i still have a couple of customers left from those days. i have been able to raise prices on them a little, but not nearly to what the work is worth. for example, one customer i still work for was given a price of $50 for trimming of shrubs, well when i wised up a bit i knew it was worth much more than that. its about 3-4 hrs of trimming, and some real pain in the a** stuff( pom poms, spirals). i did manage to raise it up to $85, but it should be more like $200. i couldnt just go from $50 to $200, so each year i take it on the chin and do the work, but its one of these dreaded days when i have to do it. what would u guys do?

[lawrence stone]

Charge $35/hour with a two hour min. for any shearing or pruning.

Actually I like to build this into my yearly services pricing so I can get more like $50-60/hour.

[bobbygedd]

lawrence u always seem to be the first to answer my questions. i know now how much i need to get for the work, but my problem is raising the price by so much. it started at 50, would u feel uncomfortable calling mrs smith and saying listen, your price just went up by $150 for trimming? i know why i made this mistake, because i was green at the time, but how do i explain a huge price increase to mrs smith?

[Guido]

many letters and examples on here to help raise a customers pricing, going into detail the reasons why. Those might be of help to you if you have some customers that you either need to get today's rate or drop them.

If you want to keep them around though, and you can live with the slow increases, I'd just do what your doing now by increasing it every year. I'd just change one thing. Let them know what your doing. They'll understand more when the time comes if they know you've been giving them a break.

Hope this helps!

[GrassMaster]

Hello Everybody:

Quote:>>would u feel uncomfortable calling mrs smith and saying listen, your price just went up by $150 for trimming?<<

Yes, I would. Is there any chance you bill her by mail? It would be a lot easier to put it on her bill, that next time it will be So & So.

Maybe you need to just write her a letter & give her a list of your fees. Do as little expaining as possible. Maybe offer a reduced fee, $150 sounds good. Would you have even posted if you charged her $150?

I made this mistake on a lot of Customers & 3 years later I included the raise with my bills (over 50). LOL, nobody complained, one even told me it wasn't enough. Then when I did that first raise I told them that in most cases there would be a small raise yearly.

It's Tuff but it's call being Self Employed. You think a Doctor, Lawyer or CPA would even talk to you if they thought you payed Half what they charge?

[Charles]

Some of these people are so tight with the money you may never be able to go up on them enough to be inline with todays prices. I got some I have been oding for over 10 years and they give me the same speech at the beginning every year:
"Maybe I will have to move into an apartment. my kids have been after me to do that" and/or:
My bills are going up like crazy and my heating bills were out of sight this year. I may have to buy a mower and do this myself. BUt oh dear, I would hate to lose you" She says this as her legs are shaking from standing up a few minutes.
Some of these people have been paying close to the same price for 30 years and they have practice how to keep it that way.
I just go up on new ones and go up a few dollars on the not so tight tightwads.
But I doubt you can get away with going up 20$ plus per year on anyone and get away with it.

[HOMER]

Well.....................................yes, it was tough sending out those letters at the first of the month to 4 of my commercial accounts. I only have 2 of them now! It was take it or leave it and 2 of them left it, but that was fine with me. I did the same thing and underpriced these accounts from the get go. Three years later I try to get what they are worth and send the letter, my increase was $150.00 per month for 2 and $200.00 a month for one of them. I haven't even heard from one of these yet...............and I haven't been back to cut it either. One I made a compromise with but I actually came out on the good end.

Tough to do but if you can afford the loss then do it and get it behind you..................I have some more I want to do as well.

[script]

I had this problem a few years back and after "taking it on the chin" for a while, I finally talked to my customers. I told them that, my inexperience has been getting them a really good deal on my services, but because I now know what the market will bear and because my time is now so much more in demand that I will have to raise them to what my current rates are. I lined up a few numbers to pass on to them just in case they decided to find someone cheaper. I didn't loose any of my customers, and most of them knew that they were getting services dirt cheap and didn't mind the increase. If they're happy and satisfied with your services they will understand and won't mind paying your prices, and the longer you wait to raise your prices the more money you loose over time.

Hope this came out right, I think my brain is still frying from being in the sun all day.

Bobby

[cantoo]

Would you be better off telling them that the reason for the low price before was that you weren't that experienced and wanted to learn the business and now that you are a "professional" you need to raise your rates to match your experience. You have adding new and better quality equipment to your business so you can do the job better, insurance costs etc.

[Esby]

.

[Comet]

I Third that to cantoo's
Elderly people Id keep increase them just a hair though, (makes me think about my 80 year old wonderful parents) or just weazel my way out from them which I have done, wasnt worth holding on to them, You cant grow or expand with Low rates.

Other HO with double incomes living in $200,000 and up etc with thousands of dollars in landscape trees/bushes,shrubs should have to pay a $$$$ for quality service, if they have to think about quality,, they should never had installed the dawn s*** .

Keep The Landacape Market Value Up there Raise Your Prices(everyone please, Im sick of hearing: Oh I can usually get it done for $25.00 !! Oh the kid next door does it, oh they usually toss it over the fence, oh the other guy did it for!!, oh ,oh, oh LOL

I just utilized one of those templates to get out of a job politely

[TGCummings]

I've been steadily raising prices on my customers over the last year or so, due in large part to the 'education' I've received from LawnSite. I've worked out a spreadsheet that tracks my price/cut, time spent on each job, and the average hourly rate at each stop. Every month I'm able, I take the lowest customer (or customers on a single stop) on that list and raise them to acceptable levels. I tend to keep my longtime, loyal customers about 10% below acceptable averages.

I've taken some hits, and lost quite a few customers. My rates were so ungodly low that I had a complete rebuilding project on my hands. Over the last year I've gone from working 5-6 long days/week on lawns to 3 average days/week, but I've gotten the business to the point where I'm making the same on those 3 days that I made in 5-6 a year ago, and I now have extra time in the week for equipment maintenance chores and to make extra $$$ on side work (trimming, weeding, shrub removal, etc.).

One peculiarity I've noticed when sending out increases is that people don't seem to want lengthy explanations why. The few times that I've sent out 'excuses' (underpriced for too many years, loss of other customers on the block, etc.), I've gotten nasty responses. The only thing people really seem to want to hear is that expenses are going up, so rates are as well. Somehow, they seem to understand that.

Now, I keep my cost increase letters very simple, i.e.:

Due to rising costs, I will need to increase the rate of basic weekly lawn service on your property to $XX(X)/month beginning September 1st, 2001.

I then thank them for being long and loyal customers and tell them to contact me if they have any questions.

These types of letters, by and by, I get no response from. Service continues and they pay the new rate as of the beginning of the new service term. I'm fully prepared to explain further if they call or stop to talk to me, but with a letter like this I haven't had to as of yet.

This is what I've found after a year of constant increases to different customers. Circumstances obviously vary for everyone, but I thought I'd share my particular observation. ;)

Hope it helps!

-TGC