Are You Raising Prices This Year or Going Backwards

Discussion in 'Lawn Mowing' started by JimLewis, Jan 25, 2008.

  1. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    How many of you know what the rate of inflation was for the last year.

    Would it surprise you to find out it was 4.5% last year? (2.5% is typical.)

    So that means if you were charging or basing your labor rates on $60 per hour last January, you would need to charge $63.00 per hour this year - just to make the same as last year. If you were charging $35 per cut, you'd need to charge $36.50 per cut this year just to stay the same. This isn't a raise. This is an even. Just to stay even with what you were making a year ago, these are the prices you'd need to charge. Now, if you wanted to actually make MORE money this year, you'd have to raise prices more like 7-10%. That would be a raise.

    If you're not going to change prices from what you charged this time last year, then you are effectively giving up almost 5% of your income. And a much larger percent of your profit. If you made $20 in profit for every $100 you took in income last year, then this year you'll be making only $15.00 per every $100.00 in income. For those of you in Jersey, that means 25% less net profit!!! ;-)

    Just something to think about. I know everyone's concerned about the economy this year and you're probably considering NOT raising prices because the economy isn't doing so hot. But you may want to reconsider after looking at these stats.
     
  2. coonman

    coonman LawnSite Senior Member
    Posts: 682

    I raised some last year, and also 2 of my customers raised their per cut $5 for me because of gas. I will be bidding new ones a little higher, our costs are going up, so our prices will have to follow if we want to continue to make a profit.
     
  3. steve45

    steve45 LawnSite Bronze Member
    Posts: 1,325

    Unfortunately, the government figures lie. I believe inflation is actually higher than that, but social security cost of living raises (COLAs), etc. are based on the government figure.

    That said, I think that one would need to look at the increase in actual costs. Fuel has gone up a lot. Labor only goes up if you give raises. What about insurance? Vehicle expense? Keep in mind that a lot of things have actually come down in cost (electronics & mortgage interest, for example).
     
  4. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Yah, I agree with all that. I am not sure what the true rate of inflation was. But I could conceive it being higher, particular for our industry. For the reasons you mentioned.
     
  5. yamadooski

    yamadooski LawnSite Senior Member
    Posts: 434

    Thats really nice and all but tell that to all the bonehead lawn retards in Tampa.....
     
  6. RGM

    RGM LawnSite Senior Member
    Male, from Baltimore Md
    Posts: 979

    Here in Baltimore the cost of living has been killing us especially in housing i had to raise last year and might have to again this year
     
  7. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    Nope...all this bad economy means is that there will be thousands of new $20 lawn cutters out there this year trying to make it big in their own business
     
  8. F Y P M

    F Y P M LawnSite Member
    Posts: 135

    Jim there's 3 options for this:
    1: Raise prices

    2: Cut employee hours

    3: Buy a Quickie

    I'll DO number 1

    DON'T BE PENNY WISE AND DOLLAR STUPID!!!
     
  9. Grits

    Grits LawnSite Silver Member
    from Florida
    Posts: 2,994

    I'm keeping mowing prices the same. My prices were high last year. I'm going up on landscape prices.
     
  10. Mike Blevins

    Mike Blevins LawnSite Bronze Member
    Posts: 1,362

    I don't have to raise all my prices. I have some customers that give me a raise when the gas prices go up. I'll try to charge accordingly this year when giving estimates. But like it was said the $20 yard guys will be out in full force.
     

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