2008 increase

Discussion in 'Pesticide & Herbicide Application' started by rcreech, Jan 20, 2008.

  1. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,046

    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?
     
  2. mikesturf

    mikesturf LawnSite Senior Member
    Posts: 789

    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.
     
  3. lush&green

    lush&green LawnSite Member
    Posts: 184

    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.
     
  4. ted putnam

    ted putnam LawnSite Platinum Member
    Posts: 4,539

    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.
     
  5. MStine315

    MStine315 LawnSite Senior Member
    Posts: 789

    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%).
     
  6. mikesturf

    mikesturf LawnSite Senior Member
    Posts: 789

    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.
     
  7. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,046


    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!
     
  8. MStine315

    MStine315 LawnSite Senior Member
    Posts: 789

    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.
     
  9. lawn king

    lawn king LawnSite Silver Member
    Posts: 2,264

    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!
     
  10. teeca

    teeca LawnSite Bronze Member
    Posts: 1,202

    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.
     

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