PDA

View Full Version : raise prices EVERY YEAR?


bobbygedd
11-16-2004, 09:37 AM
does anyone raise prices every single year? i met a nice fella the other day. very knowledgable, good established business. he claims he raises prices 2-3% a year, every year. i don't think it's possible for me to do this. anyone?

brentsawyer
11-16-2004, 09:41 AM
Anything is possilble. Put yourself in a customers shoes. They pretty much know how much there prices will be raised each year and since it is only 2-3%, it's minor, unlike how alot of people raise prices by $5 increments, 2-3% on a $40 account is $.80-1.20 each year.

geogunn
11-16-2004, 09:46 AM
I don't. for the people that started with me they pay the same.

I am faster now than I was when I started so I figure it evens out.

for new customers, they start with a "current" price.

GEO :waving:

cward
11-16-2004, 09:46 AM
BobbyG,
I have had good luck with raising prices 2-3%/yr. The sad part is, if you are at the top of the price range for a particular yard or area, you could price yourself out of a job. I believe most people realize how expensive equipment and GAS have become. Most people expect a 3-5% cost of living increase out of their jobs, aren't we entitled to the same? I just tell my clients that I am going to do it and no one has fired me yet. By telling them ahead of time, I have time to figure out how they are handling the increase. It gives me time to adjust the increase or change my mind. However, I don't care how nice the yard is, I'm not mowing it for free. For my customers, it averages 0.97 cent increase per mowing.

bobbygedd
11-16-2004, 09:46 AM
what makes this hard for me to believe is that @3% increases, over 5, 6, 7 yrs, the competition will devour you eventually. it seems easy enough to do a nice job, and get $30 for what the competition is charging $22, $25 for. but, the competition will remain at $22,$25. after 5-7 yrs, with regular increases, my $30 fee goes to like $35-$37, and puts me right out of it.

PaulJ
11-16-2004, 09:50 AM
I've raised some prices every year. But the accounts I took over 4 years ago were way under priced by the former lco. Now I know better and I have a better handle on my expences. But with gas, insurance, and repair prices going up all the time, we have to raise too.

Lawn-Scapes
11-16-2004, 10:12 AM
what makes this hard for me to believe is that @3% increases, over 5, 6, 7 yrs, the competition will devour you eventually. it seems easy enough to do a nice job, and get $30 for what the competition is charging $22, $25 for. but, the competition will remain at $22,$25. after 5-7 yrs, with regular increases, my $30 fee goes to like $35-$37, and puts me right out of it.

Seems as though you've answered your own question.. however, I think you could get away with a .50-1.00 raise per year.. with superior service.

chevyman1
11-16-2004, 10:21 AM
I began a plan this year (my first as a company) where half of my customers got a 2-year price guarentee, meaning no increase during that time if they stay with us (except in the event of gas, glad my Dad said write that in)...the other half of the customers will be raised n 2005. This way, 50% of my accounts get raised in 2005, the others in 2006 and no one feels like we keep jacking up the dollar figures..

fga
11-16-2004, 10:30 AM
I never looked at it percentage wise, but i raise them every couple of years, maybe every 2 years, it will go up 1.50, 2.50 dollars per cut. with my given 80 accounts, it comes out roughly to an extra $7-800 a month. i'm not too concerned with the competition, my prices are right im the middle. some guys are way on top, others work for half of what i charge.

there are several factors i try to use.

1) is that house underbid? sometimes i'll get a comment from the customer saying, "are you sure with that price, my old guy was alot more." I answer with that's my price, ans slowly raise them up the following year.

2)How did I leave off the season? Honestly, sometimes i leave off the season on top of everything. not a singlr request goes undone, i've exhausted my work tasks. Other years, similar to this one, i feel like i'm limping into the off season. most customers are 100% satisfied, others are upset i didn't get certain things done yet, due to my own reasons. Those are the customers where i may not raise next year, in hope of keeping them.

3) Is it an acount i don't care if i lose or keep? those i will try to raise 10 bucks for the month or so. win win situation.

JFGLN
11-16-2004, 11:58 AM
I raise my mowing prices every other year and haven't ever had any complaints.

walker-talker
11-16-2004, 12:04 PM
I have a buddy that told me he raises his price $1 every year. Take that times his 150 clients that's $150 a week or $4500 a year (based on 30 cuts per year). I asked him if everyone stays with with him and he said yes....some for 13 years. I find it a little hard to believe though. I think it's fair to raise costs, but only in relation to your costs. A person will have to stay on top of things since we have so many costs, but it can be done.

parkwest
11-16-2004, 12:25 PM
You guys really need to learn to do JOB COSTING. That means you need to break down each individual job and find out what your cost are. Then adjust your prices to reflect all your cost plus the profit margin you have targeted. (and please stop saying you have an 85% profit margin lol) Once you know these numbers then you will know whether or not you need to adjust your prices.

Question: How many on here know what their "break even" point is on each job?

tiedeman
11-16-2004, 12:29 PM
I stagger my mowing price increase so half of the customers get an increase one year, and the other half get an increase the next year. So basically the customers have one year off where they don't get an increase.

Now with my per hour charge I change that a lot. I just changed it last year by $5, and I am going to raise it up another $1 to $2 this year.

bobbygedd
11-16-2004, 12:37 PM
i do park. in fact, that 85%....it's close. it's called BARE MINIMUM overhead. use thy back, not thy money

Landscare
11-16-2004, 01:58 PM
I think that you should be able to raise your prices around 2% per year, I have about 50 commercial contracts and it is written in the contract that we are allowed a 2% increase per year without having to re bid the contract... You may want to think about signing your customers up with a multi year contract and then you can put a clause in there for cost of living increases.

Every other industry does it why cant we

Palmer Lawn Care
11-16-2004, 02:27 PM
Last year I raised all my prices about $5, to compensate for the high gas prices and because I was only charging about $17/lawn which in my opionion wasn't very much money. So now im charging about on average $24 a lawn. I plan to keep this average price for a couple of years and adjust it accordingly to gas prices, equipment prices, and some other factors.

[edit]
The $24/lawn is for weekly lawn maintenance for residental customers, for commercial account I charge more than $24.

parkwest
11-16-2004, 03:39 PM
i do park. in fact, that 85%....it's close. it's called BARE MINIMUM overhead. use thy back, not thy money

bobby, you want lots of overhead in your business!!

Profit gets taxed!!

Work within the rules, not against the rules

parkwest
11-16-2004, 03:41 PM
Last year I raised all my prices about $5, to compensate for the high gas prices and because I was only charging about $17/lawn which in my opionion wasn't very much money. So now im charging about on average $24 a lawn. I plan to keep this average price for a couple of years and adjust it accordingly to gas prices, equipment prices, and some other factors.

[edit]
The $24/lawn is for weekly lawn maintenance for residental customers, for commercial account I charge more than $24.

This is what I mean!

You can't have "opinions" on what to charge!! You need cold hard numbers!!!

rodfather
11-16-2004, 04:22 PM
I wouldn't waste my time adding $1 or $2 to a weekly bill ($5 increase for me is the bare minimum on even my smallest lawns)...thanks for the reminder too bobby.

1MajorTom
11-16-2004, 05:29 PM
uuuggghh, I hate the idea of 'nickle and diming' a customer every year. We raise prices every year on at least a third of our customers, the following year, we raise another third, etc... so that way the same customers aren't getting a price increase each year.

tiedeman
11-16-2004, 05:31 PM
uuuggghh, I hate the idea of 'nickle and diming' a customer every year. We raise prices every year on at least a third of our customers, the following year, we raise another third, etc... so that way the same customers aren't getting a price increase each year.

basically the same thing I do, except I do 1/2, not 1/3

rodfather
11-16-2004, 05:38 PM
Well, I know the cost of living contiually goes up and so do many (maybe most?) of our expenses (variable) as well.

But, one thing I try to keep in mind when reviewing/analyzing my pricing structure is one key issue, ie., the size of the lawn to be mowed and/or the number of leaves that are gonna drop...this stays constant (fixed) and is.

bobbygedd
11-16-2004, 06:49 PM
bobby, you want lots of overhead in your business!!

Profit gets taxed!!

Work within the rules, not against the rules
so then, i should spend $100,000 for equipment, then only make $120,000? that extra 20 grand.....can't pay my household bills. i'm so confused

AztlanLC
11-16-2004, 06:56 PM
Bobby does that guy have a company which name stars with "D" and finish with "R", I know a guy from New Jersey that does exactly that, and I do it too every single year I raise prices by 2-3%

Lux Lawn
11-16-2004, 07:25 PM
Last year I raised about a third of my customers between $5-10 a month some I lost because of it to new guys starting up with lower costs.Next year anyone who was not a new customer this year will be raise and the hourly rate is going up $5.00.

dvmcmrhp52
11-16-2004, 07:38 PM
You guys really need to learn to do JOB COSTING. That means you need to break down each individual job and find out what your cost are. Then adjust your prices to reflect all your cost plus the profit margin you have targeted. (and please stop saying you have an 85% profit margin lol) Once you know these numbers then you will know whether or not you need to adjust your prices.

Question: How many on here know what their "break even" point is on each job?





Very good points Parkwest, If a job is quoted and 3 years later it is still yielding a proper profit why price yourself out?
Some are quoted a bit low, some a bit high, you need to KNOW the difference to stay competitive AND produce profit.

crawdad
11-16-2004, 07:50 PM
uuuggghh, I hate the idea of 'nickle and diming' a customer every year. We raise prices every year on at least a third of our customers, the following year, we raise another third, etc... so that way the same customers aren't getting a price increase each year.

I wish that gas stations and insurance companies felt this way, scared of losing their customers. My insurance company tried to double my cost last year. Tried. Failed.
Crawdad

Rollacosta
11-16-2004, 07:56 PM
does anyone raise prices every single year? i met a nice fella the other day. very knowledgable, good established business. he claims he raises prices 2-3% a year, every year. i don't think it's possible for me to do this. anyone?

for a few years ,back in around 99-2002 prices went up and down almost yearly :dizzy: and if you didn't adjust your prices in these weird years your ship would sink..thankfully the last 2 years we have seen a steady gross increase but still only a very slight net increase..i play the raising price game by ear

Runner
11-16-2004, 10:36 PM
I agree that raising the prices every year (though justifiable) is a negative ,arketing strategy. It just leads the customer to ba able to say. "Yeah, they're a good service, but man, their prices go up every year."
I like to wait and do mine every couple of years. This way, I can make a suitable increase, but it's not a regular, expected thing.

bobbygedd
11-17-2004, 05:30 PM
runner, i agree, but, how then do you keep up with inflation? your operating costs are going up every year. how do you keep up? do u take a smaller salary each year?

lawncat
11-17-2004, 06:37 PM
I think those of us that are full service maintenance firms have it a little easier than those that just mow! We can leave the mow price alone for quite some time but raise the price of almost everything else we do on a real regualr basis. Seems a lot of clients key on the mowing service call price and basically don't care about the rest of what you do! Some acounts are so comfortably priced that we do not really need to adjust the mow very often.
We have had a $45.00 min stop charge for several years and that weeds out the price shoppers. This may not work in other areas, but this is how we have always done it with no trouble.

meets1
11-17-2004, 07:00 PM
I increase our "other services" every year. Mowing I generally stay the same for a period of time, say 3-5 years, then I increase the per time mow rate. I increase our snow removal business every year as well. I take on all the snow we can to keep my key guys working / busy and there just is more demand for snow removal from people than there are guys in this line of work. Every area is different and justifies different rates but I am probably the price setter in my area but we never have a lack of business coming our way. Starting next year, 2005 I am going to add a sur-charge to all customers for gas, especially the non-regular clients, and i am going to start charging for our landscape planning/design. I put to much time into planning and meeting and going over with the client and then they tell me that they like the plan but will pass. Then 2 months later and I ride by and there is an other crew, family, friends, installing our designed landscape.

shearbolt
11-17-2004, 07:38 PM
I raise prices @ 3 or 4 percent every year, unless they're under contract. In 7 years only 2 customers have complained.

Albemarle Lawn
11-17-2004, 08:17 PM
Charge em to the point of pain. Its what the real estate market is doing around here.

If you can pay $475,000 for a 1200 sf bungalow, you can pay more than a stupid $35 to get your grass cut.

Break it off in em. Raise prices at least every year, and when oil prices go nuts pass that on too.

YardPro
11-17-2004, 08:38 PM
you should raise prices every year. your overhead increases every year, so should your prices. if you're worried about the competition after 3-4 years, by that time they won't be able to do it for less either, if they can, fine let them have it. go on to more profitable work.

you have to look at your business as a business, think of it from percentages, if you don't you'll never have a successful business. A saying among accountants is "watch the nickles and dimes, the dollars take care of themselves)

if you are generating $100K/year and can generate or save 3% that's and extra 3 gran of PURE PROFIT.

if you have a $10K/ year profit (after salaries, yours included), that 3K is a 30% increase in PROFIT.

Branching Out
11-17-2004, 09:20 PM
I agree that raising the prices every year (though justifiable) is a negative ,arketing strategy. It just leads the customer to ba able to say. "Yeah, they're a good service, but man, their prices go up every year."
I like to wait and do mine every couple of years. This way, I can make a suitable increase, but it's not a regular, expected thing.

DITTO Every five years or so I increase....But. With the cost of gas on the rise I increased last year to cover....It was a year or so yearly on most....New customers saw it up front

Branching out....

lawnman_scott
11-17-2004, 09:42 PM
I raise prices every few years. But its more than 2 or 3%. If you started a customer in 1994 at $20.00 and raised his price 3% yearly, his price for 05 would be $27.68. Thats not very much for 12 years.

ed2hess
11-17-2004, 10:07 PM
In our area there are 1000 lawn mowing companies. You can talk all day long about your overhead and cost of gas etc. but you have to meet your competition. In over 25 years the prices are exactly the same in this area. Most yards are $25/hr for a real good professional job. It doesn't matter how much the customers make they are always looking for a deal just like the commericial people. Once we learned how to bid LOW we did just fine in building our business. The real money is in the extra things you can do like irrigation, fertilizing, pest and fungus control, tree trimming, drain lines, landscaping, mulching and flower beds. If I was doing this work part time I would set rates high, raise prices yearly, and "cherry" pick jobs!