Raising Prices?

[MOturkey]

What are your thoughts on raising prices, particularly on smaller accounts, even if they still meet your hourly gross? In other words, will you raise prices periodically or occasionally because of the simple fact that the cost of living and doing business is continuously increasing, or do you tend to just keep the price the same as long as you service an account?

I have several accounts at or near my minimum price that have been paying the same amount for several years, and am considering raising all of them a bit next spring.

Also, if and when you do increase prices, will you notify your accounts ahead of time, and if so, when?

Thanks for any input.

[lawnkingforever]

A raised quite a few this past spring. I notified those affected via spring newsletter. I lost one account out of those increased. This year I am raising the rest. Most will be increased by 3$. The ones with larger increases will receive a phone call personally by me with an explanation. I did not have any kick back with the 3$ dollar rise. The one I lost was a 7$ increase. The extra 3$ spread over multiple accounts was a nice boost in revenue.

My situation is similar, as I am still hitting my hourly rate goals. It is nice to stay ahead of the curve with the rising costs of doing business. For example, if gas prices rise I am not scrambling to raise prices or adding a surcharge. On top of the price increases, I also dropped a couple of customers that needed to go, fenced in yards, every other week, too far away ect.... Trimming these accounts off the schedule opened up slots for better customers.
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[orangemower]

I raised all of my accounts due to gas prices. I explained to them that I quoted them the price when fuel was $2 cheaper per gallon. Not one questioned the change. Matter of fact, two customers said they were wondering if I was ever going to increase the price! Mind you, I make good money from them already but for me to stay close to my numbers I had to increase the amount I charge them. I have one lady that when I told her she said, "that's all" like it wasn't nothing. A whopping $3 increase and she said, "I'll just make it $5 more! Again, I'm making good money so it's not that my pricing is too low. I do have one bottom feeder that doesn't want anything done but cut the weeds/grass. That one might go bye bye next season.

[bohiaa]

your cost is just that, it's YOUR COST. You simply cant work for free, I have been on earth for 51 years and have only met 1 person that did this, and it was for the tax break. so it wasnt totaly free.

your profet margin should stay the same. <---- Notice the period

[THIESSENS TLC]

i raised all by $3 this year, except for 3 accounts. The one client said "you do great work, and if you feel like you need to raise it $5 next year then go ahead". i'll probably raise him $3 at the very minimum. This guy pays well as it is, so im not sure if its a good idea to take full advantage of the $5. I've raised prices a few times since i started in 08' and not one has questioned. I usually tell them a few weeks before I start in the spring. That way if they reject, maybe they'll think to themselves later on when the next guy doesnt show up that "at least he gave us notice". I just had to tell my clients that i do snow for that this year I wont be able to do it for them. They were fine with it, and said see ya in the spring! Common courtesy goes along way!

[grandview (2006)]

Every year, better a little at a time then bigger one every couple of years.

[RedSox4Life]

Every 2 or 3 years i do an "audit".

Ill have my guys time the lawn to the minute for a couple consecutive weeks, any lawns below my desired hourly rate Ill raise the price accordingly.

[RedSox4Life]

Originally Posted by RedSox4Life

Every 2 or 3 years i do an "audit".

Ill have my guys time the lawn to the minute for a couple consecutive weeks, any lawns below my desired hourly rate Ill raise the price accordingly.

I had a conversation with a buddy of mine that has a bunch of rental properties about raising price increases earlier this year. He says, every year when the lease runs up he automatically raises prices 3%. This is regardless of gas, insurance, property taxes, milk, eggs etc.

[THIESSENS TLC]

Originally Posted by RedSox4Life

I had a conversation with a buddy of mine that has a bunch of rental properties about raising price increases earlier this year. He says, every year when the lease runs up he automatically raises prices 3%. This is regardless of gas, insurance, property taxes, milk, eggs etc.

thats because he can get it, my dad has 2 5 unit buildings and as soon as a lease is up, he raises the rent a certain percentage. I think its around 3%. Its illegal to raise the rent before the lease is finished though. If we did that, i can only imaging that it wouldnt be long before we had no clientele.

[RedSox4Life]

Originally Posted by THIESSENS TLC

thats because he can get it, my dad has 2 5 unit buildings and as soon as a lease is up, he raises the rent a certain percentage. I think its around 3%. Its illegal to raise the rent before the lease is finished though. If we did that, i can only imaging that it wouldnt be long before we had no clientele.

What is inflation? 3% annually? I think it makes perfect sense for us (or any industry) to raise prices 3% per year.


That being said, if our customers were to receive a notice that we are raising prices EVERY year... I think the average customer would start looking elsewhere. Even if it were only 3%.

So, instead of 3% per year, lets say you or I were to raise prices once every 3 years, for a 9% (or10%) raise. I think the average customer would have a lot easier time swallowing that.

BUT... as nice as that all sounds, its not how I personally go about it.

At the end of the year, i do the math to figure out how much it costs me... then add in desired profit... to arrive at my target "per hour" rate. Lets say in 2011 my rate was $60/per hour... in 2012 it ends up being $65 per hour.... thats where my audits come in. If lawn A takes 60 minutes for one guy, in 2011 Ill charge $60. In 2012 Ill charge $65, even though it took the same 60 minutes to complete.