Automatic Price Increases

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, Jan 23, 2004.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I've just finished writing my 2004 residential service agreement (again) and I've decided to add a section for price changes.

    Here is the text:

    "Prices for all services will automatically increase 3% every January 1st."

    Anyone else do this or something similar?

    Later,
    DFW Area Landscaper
     
  2. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

  3. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Posts: 2,128

    I wil be sending out a letter to everyone soon that will outline a 3% increase as well. I don't think you should relay your intentions to increase it 3% every year though, even if that is what you intend on doing. They only need to know what you are going to do now. Thats my opinion. Don't give them any extra to ***** about than you need to.
     
  4. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    If you charge by the cut, and they pay $30, are you going to charge $30.90, and the next year$31.83?
     
  5. LAWNS AND MOWER

    LAWNS AND MOWER LawnSite Bronze Member
    Posts: 1,129

    I'm not sure if I would set a 3% increase in stone. Every account is different. Going by your formula, a $40/cut account would increase to $41.20. I usually go up on my rates by $5 increments every other year. Some accounts I haven't gone up on in 6 years because I know they would flinch, but I can afford to keep the price the same because it was overpriced to begin with.
     
  6. REALtreeGodFather

    REALtreeGodFather Guest
    Posts: 0

    I'd have to agree. What if fuel costs rose alot more than expected for example?

    I'd just say it's going up "x" amount this year. Telling them it's going to go up every year is likely to send alot of people scrambling.
     
  7. greenback

    greenback LawnSite Member
    from L.I.
    Posts: 175

    i do not agree with that, $30 cut, if you want to increase it go to $35. you are going to get 3% on every cut but are you going to ask them for $30.90. the customer knows thats bull@#$%. raise it 2 or 3 dollars then if not the full 5. otherwise i say cut it at 30 and raise some of your bigger lawns up 5 bucks and that will cover your 3%.
     
  8. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    ++++If you charge by the cut, and they pay $30, are you going to charge $30.90, and the next year$31.83?++++

    Why not? Why is that so complicated?

    Most customers won't bother reading the service agreement. If a customer does take the time read my service agreement and notices this, do you really think a 3% annual increase is going to scare them off? They are probably someone's employee and they probably get a a cost of living increase equal to that or more every year. Plus promotions. How many people are going to be concerned in March or April about a minor increase in price that won't effect them until next year? I just don't think this will be a deal breaker.

    The alternative is to either keep mowing the customer's lawn at the same price the next year or contact them and give them the option of either cancelling or accepting a higher price. That sounds like a very risky move. With the automatic price increase built into the contract from day one, I get 3% more gross the next year and I don't have to risk losing a customer. When they get their first bill with the increased price, they probably won't even realize that the prices have gone up. If they do call me with a complaint, I'll just explain that my prices go up 3% every year to keep with inflation. They should be able to understand that. Occassionally, I may have to waive the increase. And yes, there will be occassions where I lose the account over it. But I seriously doubt that customers will refuse to sign up with this term on the front end, especially since my contract states that either party may cancel the agreement with 10 days advance written notice.

    This may require a little salesmanship, but I don't think it's a deal breaker.

    Later,
    DFW Area Landscaper
     

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