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rcreech
01-20-2008, 03:43 PM
I have a simple question for you veterans! It is a simple business question but is hard for me to make. I hate raising prices!

I am getting ready to send out my prepay letters and I am still debating on my increase %.

I bought all my product early so technically I probably wouldn't have to raise my prices as much this year as most. But I also don't want to leave the money on the table either.

I was thinking of raising my prices 5%, but not sure that is enough since the replacment cost will be much higher next year.

What are your thoughts because this isn't easy? :dizzy:
I don't want to lose good customers for being greedy (or atleast that is what they will think)!

Is 5% a reasonable increase?

mikesturf
01-20-2008, 03:52 PM
Since you bought this years product mostly at last years prices, next year you are going to get hit hard. Raise some now and some next year. I always raise my prices every year; inflation, etc.

lush&green
01-20-2008, 05:12 PM
We just sent our renewals out. Everyone got raised 7%. We always raise them 5% but with all costs rising we went another 2%. Our customers thought get a 5% discount if they prepay. This year we preordered our first 2 rounds at great pricing and if we prepay we get an extra 2%. So I gave the customer an extra 2% off if they paid by the 21st of Jan.. So far 12k thru the door. Its gonna be tough for anyone who did not raise prices or get in early to order. The prices have gone thru the roof and will continue to climb.

ted putnam
01-20-2008, 06:43 PM
Rodney,
As you know I had a substantial increase this year. I haven't had an increase in 2 years. I hated to do what I did but had to. I'm with the other guys on this one. I'd raise some now and then again next year. I've only lost 12 customers so far but I know through some of my contacts that there has been some moaning and groaning about it. In the future I plan to raise a little each year instead of one big whack. It's been my own fault for not doing it all along. I just didn't want to raise my customers prices unnecessarily. I had no idea the markets could be this volatile and it snuck up on me.

MStine315
01-20-2008, 07:10 PM
Since you bought this years product mostly at last years prices, next year you are going to get hit hard. Raise some now and some next year. I always raise my prices every year; inflation, etc.

This is an excellent viewpoint. I raised my pricing 4% last year, but am going 8% this year and that's with nearly my whole season of fert and control products pre ordered/booked. I debated everything from 4% to 10% and settled on 8. I guess I'd rather lose a few customers than get hit with an unknown in June such as fuel. Glad to see others in the same range(7%).

mikesturf
01-21-2008, 08:56 AM
This is an excellent viewpoint. I raised my pricing 4% last year, but am going 8% this year and that's with nearly my whole season of fert and control products pre ordered/booked. I debated everything from 4% to 10% and settled on 8. I guess I'd rather lose a few customers than get hit with an unknown in June such as fuel. Glad to see others in the same range(7%).

It always bothers me to loose customers. However, if the loss is due to price and not quality, then f### them. You should never do work for a lower profit than last year. Every company has to raise their prices this year. There will be customers that will shop when they see a price increase. You will probably be getting many calls this spring from other price shoppers looking for your best price. You have to stick to your guns and decide what kind of company you want to be know as. Do you want to have ok lawns and have the cheapest price-working on quantity or to you want excellent lawns that stand out and make the customer pay to that quality. Some people just want their lawns to not be covered in dandelions. They don't care about aeration, thickeness, etc. and thats ok. Think of yourself when you go shopping. Some people are ok with McDonalds coffee for $1 when others have to get their Starbucks for $5. You need to find your niche and it will be a process weeding through customers that fit into that niche.
Also, try looking again at where you could cut costs. I'm eliminating (selling their contracts to another company) customers that are outside my normal area. This will save on gas and the saved driving time will allow me to service more people in my tighter area. Good luck.

rcreech
01-21-2008, 09:06 AM
It always bothers me to loose customers. However, if the loss is due to price and not quality, then f### them. You should never do work for a lower profit than last year. Every company has to raise their prices this year. There will be customers that will shop when they see a price increase. You will probably be getting many calls this spring from other price shoppers looking for your best price. You have to stick to your guns and decide what kind of company you want to be know as. Do you want to have ok lawns and have the cheapest price-working on quantity or to you want excellent lawns that stand out and make the customer pay to that quality. Some people just want their lawns to not be covered in dandelions. They don't care about aeration, thickeness, etc. and thats ok. Think of yourself when you go shopping. Some people are ok with McDonalds coffee for $1 when others have to get their Starbucks for $5. You need to find your niche and it will be a process weeding through customers that fit into that niche.
Also, try looking again at where you could cut costs. I'm eliminating (selling their contracts to another company) customers that are outside my normal area. This will save on gas and the saved driving time will allow me to service more people in my tighter area. Good luck.


Thanks for the feedback!

Should be an easy decision to make....but it hasn't been. I hate to lose customers as I don't want to cut off the hand the feeds me! But I also know that price increases are needed. I have raised them every year, just not this much at one time!

I decided to go with 6% for this year so that should set me up for next year!

MStine315
01-21-2008, 09:39 AM
Good call Rodney. I'm glad to see you do it. You MAY lose a couple, but even if they say it's price, you may have lost them for various reasons anyway. Price is just an easy out for people. Good luck! Let us know the results.

lawn king
01-21-2008, 10:41 AM
We are not raising rates this year! We had a large increase last year and we have always been the most expensive l.c.c. in the area, we always will be! We are going to push aeration & tractor services, shop around for the best prices on chemicals and look to save everywhere we can. We already have an advantage on the local competition by running diesel trucks & buying our road fuel in bulk (shop fuel), we save an average of 20 cents per gallon!

teeca
01-21-2008, 03:00 PM
i was co-owner of a gas station for longer then i want to admit, and we ALWAYS had to price gas off the NEXT load we got. if gas was $1per gallon monday and next load was due on friday and we got a price increase on tuesday of $.50, guess what the price was on tuesday was, yup $1.50..

i price off what current cost are, the mantality is that when you have an oppertunity to make money, take it, it doesn't always work out that way. hell sometimes i'll price off lesco's inflated pricing, because i know alot of lco's buy from them and they have to charge more for the services they do, so i'll raise mine and make more than they do.

greenhornet
02-17-2008, 12:33 PM
just wanted to get an idea of pricing out aeration. how do most of you handle pricing out a job? charge by the size, 3x's the cutting price or what. i live on long island where the median of homes range from 350-650 thousand dollars ( 1/4 to 1 acre) or $25 -$ 55 per weekly cut. any suggestions would be appreciated.

grassman177
02-17-2008, 01:49 PM
hey rcreech, remember i had athread a month ago or so on this, i went with 10% and not a single word about it so far and about 75% done with contracts, but hope i dont have to do it again next year or folks might be a lookin!!??

rcreech
02-17-2008, 01:59 PM
hey rcreech, remember i had athread a month ago or so on this, i went with 10% and not a single word about it so far and about 75% done with contracts, but hope i dont have to do it again next year or folks might be a lookin!!??

Great news, that is awesome!

I only went up 6% and should have went for more!

But...I am more then covering my increase for this year...so proabably did the right thing.

The Ranger
02-18-2008, 08:23 AM
For Lawn King

Fuel cost should be about 3% or less, while product costs might be as high as 25% of your financial statement. Your product cost will rise a minimum of 26% this year. You should review how much less your net profit will be by asorbing the increase.

boats47
02-18-2008, 11:17 AM
I raised 7% and I hope that will cover the cost of doing business this year. You hate to do it, but you have no choice in the matter. I am keeping my figers crossed that the customers understand I can't eat $3.50 for a gallon of gas.....It is what it is......

vegomatic40
02-19-2008, 08:54 AM
Raised prices between 7-12%. Sent out letters in Dec. that prices would go up for treatments including fertilizer but others would likely remain static. Customers that I had a slimmer margin on were given the higher increases with barely a blip on the radar and in some cases were simply "price only" customers so...good riddance. Ever notice that the ones that want the best deals always seem to be the hardest to please?