Raising rates ?

[Turf Dancer]

My rates have been a little too low for too long, I need to increase rates some to make a profit that is worth staying in business. How do I do this in a small town where you see these people everyday ? pop. 17600 Example: I have one lawn that takes me 1 hr 10 min minimum and I am still doing this for $20 per week and I have to bag it and dispose of the grass.

How much should I get for this lawn ? Takes 8 min to trim and 50-60 min to mow and 2 min to blow , I mow it with a 21" Honda 216

I need to raise rates so I can expand, larger mower 36", bigger truck, and new trailer the way I want it

Thanks for any comments you may have

[awm]

when u introduce these folks to reality,
id be ready for them to start shopping.
your hope is that they call good lcos,
who will bid way over what u been asking.either way unless this is just a pt time way of stayin in shape. u gotta be loosing money . this is what i think,
may be wrong for some reason.
good luck

[BRIAN GALLO]

Being that you are in a small town, you may want to take a more gentile approach to asking for increases (that is unless there aren't that many lco's around). If you have a good relationship with your customers talk to them about your dilema the next time you cut their lawn. Simply explain to them that you are undercharging, and that the two of you need to agree on some happy medium of a price for you to continue in business. Also explain that your costs to do business keep increasing, but their price hasn't. With any luck you'll get a few more dollars out of them.

[maple city]

I also use 21" Honda. The yard you are talking about sounds a lot like my own. If I had to bid mine, it would be a $40.00 yard. It takes me about 45-50 minutes to push mow my yard, and I have at least 10-15 minutes of trimming.

You'll freak them out if you increase by 15.00, but a $5.00 increase wouldn't kill them. Blame it on high gas and insurance prices.

You may want to start charging for bagging and grass removal as well. Some do, some don't. I don't charge extra for bagging unless I do it every single time (which I don't). If you stop bagging at that house, it will really cut your time down.

I don't do any yard for less than 30.00 these days.

Good luck!

[scott's turf]

Your productivity with a 21" mower is going to be low. We try to get around $50/hr mowing with a 54" wb. We also have a $25 min which sounds like the property that that would fall into. $25 sounds right. $40 for 40 mins with a 21" mower is crazy. If you can get it that is great.

[tovoninc]

You've gotta get a bigger mower. I mow a 3/4 acre residential with lots of trees & flower beds in under an hour including the trimming and the load / unload. I use a 54" WB. I use this example because I do the job as more of a favor to a family friend: $20. That client has brought me more business from referrals than I can count. Here is the dilemma you will soon face in my opinion: Say you raise your rate & they accept it then you buy a mower, truck, trailer and you get the work completed faster. People are funny: "So, I pay you more and you buy this fancy stuff and you spend less time with me.... you're too good for me now that you are big time!..... see ya, you're fired" I suggest you buy a bigger mower and hold off on any "non-performing assets" for a while (a bigger truck & a trailer don't cut grass - you make money cutting grass). Pick the largest mower deck that fits most of your accounts and utilize the time saved per week to add more accounts. Do not increase the price of your current account or accounts if you want to keep them. Hopefully you can talk to your current customers & get some "word of mouth" referrals. You should be able to sell a higher rate to the new customers easier than risking your current clientele.

[Pro-Cut Lawns]

If you buy a bigger mower and cut your time down you have increased your hourly rate by being more productive, but, you've got more overhead. As stated before, go out for the new accounts and raise your prices. How long have you been taking care of the property that you need to raise the price on?

Here's what I did. I had to raise a couple of properties this year. The were long time customers (3years) but I decided I had to either raise the prices or loose them and pick up better paying accounts. I sent out their billing for April with a very nice letter stating that due to higher fuel and insurance rates, I needed to raise their rates and I apologized. The cost of doing business was higher and had to be reflected in my charges. I charged them the month of April at the old rate, but effective May 1, their rates would go to X amount. I told them to notify me if they wanted to discontinue service and they were welcome to shop around. They immediately contacted me and said they completely understood and no way did they want anyone else doing their lawn. I hadn't raised their prices in 3 years and I think they expected it. I only raised them 5.00 per week, but thats $20.00 per month per account. I think you just need to decide if you are willing to possibly loose them and move on. Its a risk you will take as soon as you mention it, but, you have expenses and definetly need to charge more for that particular property.

[Turf Dancer]

Thanks to everyone who has responded so far I am in the process of talking to a few customers and so far they understand. The account I am referring to I have had for 5 years and the rate has been $20 per week, It has been $20 since I first got it , never changed the rates on these people.
When I first started I could mow and trim in 52 minutes. She has a company that fertilizes 5 times per year ( every 5-6 weeks) she feels that they aren't putting on enough fertilizer so she does it half way between the time they come so it gets it 9- 10 times in 30 weeks. This Lawn took me 1 hour and 20 minutes today. I use an accelerator bagger on my 21" Honda Commercial. I had to dump it 26 times during the mowing, I used to have to dump it 12-14 times max. I am taking 4-6" off this lawn and She still won't let me come more often and do it. It doesn't look as green after it is cut because I am taking so much off , so she says it needs more fertilizer. On top of that two weeks ago I had to go dump my trailer after I mowed this lawn and it cost me $8.00 to dump the grass 640 pounds worth of grass. Well lets see that leaves $12 after the dump cost and divide that by the 1.75 hours it took me and that is $6.86 per hour before fuel and uncle sam .

How many of you would do this lawn for $20 or $25 per week
I may have lost this account but I bit the bullet and wrote her a letter stating that due to increased fuel costs, insurence, dump fees and the price of everything else going up I have no choice
but to raise her rates to cover expenses and make a living

[marley]

I STAY IN CLOSE CONTACT WITH ALOT OF MY CUSTOMERS SO WHEN I FINALLY RAISED RATES I DID NOT HAVE DO EXPLAIN IT, JUST SAID THE NEW PRICE FOR CUTTING THE GRASS WILL BE X AMOUNT OF DOLLARS EFFECTIVE ON THIS DATE. IT CAN BE RISKY BUT IF YOU HAVE GOOD CUSTOMER RELATIONSHIPS AND DO EXCELLENT WORK IT SHOULD NOT BE AN ISSUE.

[SLS]

Turf Dancer says:

"When I first started I could mow and trim in 52 minutes. She has a company that fertilizes 5 times per year ( every 5-6 weeks) she feels that they aren't putting on enough fertilizer so she does it half way between the time they come so it gets it 9- 10 times in 30 weeks. This Lawn took me 1 hour and 20 minutes today. I use an accelerator bagger on my 21" Honda Commercial. I had to dump it 26 times during the mowing, I used to have to dump it 12-14 times max. I am taking 4-6" off this lawn and She still won't let me come more often and do it. It doesn't look as green after it is cut because I am taking so much off , so she says it needs more fertilizer. On top of that two weeks ago I had to go dump my trailer after I mowed this lawn and it cost me $8.00 to dump the grass 640 pounds worth of grass. Well lets see that leaves $12 after the dump cost and divide that by the 1.75 hours it took me and that is $6.86 per hour before fuel and uncle sam ."

Well, you've done the math............

Tell her what you just told us and if she complains dump her fast. Heck, what have you really got to lose by just dumping that lawn??? About $4.00 an hour after fuel and taxes??? And then add the wear and tear on your equipment and body and mantainance time and you are practically PAYING HER to service her overfertilized lawn! :eek:

Heck, flipping burgers at Mc D's is way more profitable and gives you health insurance, uniforms, food discounts, and other bennies to boot!

[Soupy]

SLS is right. Raise her or dump her. but raise her more then $5-$10. I would at least double, if not triple the amount.

Soupy

[Tony Harrell]

26 times! I dump my bagger about 5 times depending on height. Sounds like you need to educate this customer or move on.

[John Allin]

This is a tremendous barrier that all LCO's hit as they begin to realize that they must grow to survive. Even if they don't grow, they begin to realize (often from visiting sites like this one) that the numbers don't add up. And then the tough part starts..... It's danged HARD to raise prices... especially if you figure on losing some customers. Hard to lose customers. Very hard. Especially ones that have been with you for years.

It's the fear of the unknown. You KNOW what you have coming in with that customer. You DON't know what will come in if that customer goes elsewhere. Very, very tough spot to be in.

However (and again, due to this site and it's participants) you'll find that everyone here who has been through this wall, will tell you that there ARE other customers out there. You may have to learn some new skills (such as "selling"), and that too leads to some trepidation.

One thing you should realize, and learn from the experience, is that you are now beginning to think like a business man (and doing the math is a giant step forward) and less like a dude that likes to be outside.

Don't become attached to the customer. There are others out there. One way to look at it..... if you raise your prices 50%, you can lose a fair portion of your customer base and still generate the same revenue. The margin will be higher, you'll work less, put less wear and tear on the equipment, use less fuel, and make the same money. THEN, you'll want to go get more customers at the higher rate. And it can be done (as many here will testify to).

Welcome to the business side of being in the landscape business !!!! Good luck. It certainly sounds like you're on the right path - IMO.

[Brickman]

Been there, done that. Many of us started out too low and like John Allin says relized that it was raise prices or die. I would think that unless this customer is honestly too poor (SS income) or a major tight wad they will understand that in 5 years prices didn't go up and now they do need to. I would start with a $10 increase this year, and more next year. You some times have to be creative with why you raise. Use the price of gas this year, the cost of dumping the grass at the dump would be a good one, insurance next year, licenses the next as to why you are raising prices. If you mention things that they can relate to they are much more likely to understand. One year several years ago I raise about 8 residential customers in the middle of the year $5 to cover the cost of gas. Not a one of them bailed on me. They never even said any thing about it.
With the major grass you are taking off this lawn you should be getting $60 to $75 just for the amount of grass alone. If you can't make her understand, I would say she might need to "hit the big road."
Some how she needs to understand about is the fert. One thing that I have had success with is talking to customers, and convincing them to allow me to try some thing for a set period of time. (one week, one month) And if after that period things don't look better then we can go back to doing it their way again. It has almost always worked.

[ADMowing]

John Allin -- Good post! Very encouraging. Thanks.

A & D